Developed market PE firms outperform emerging market counterparts

Returns on developed market funds came to 5.9% for the quarter versus 3.3% for emerging market vehicles. The latter still lead in one a one-, three- and five-year basis with the former stronger over 10, 15 and 20 years. Both developed and emerging market funds continue to outpace their respective public market counterparts.

First-quarter returns for the largest vintage years in the developed markets index were driven largely by widespread valuation increases led by the retail sector. For the emerging markets benchmark, returns for 2007 and 2005, the two largest vintages, were largely driven by solid performance of manufacturing and information technology investments.

Weakness in financial services was the principal drag on the performance of the 2007 funds, which represented 38.1% of the emerging markets index's value and was the largest vintage year in the index.

Capital calls from managers in the developed markets index were down 37% from the fourth quarter of 2010, to about $8.8 billion. In the emerging markets index, calls were down 42% from the prior quarter, to $2.2 billion.

As for distributions, developed markets fund managers returned just over $9 billion to LPs, down nearly 8% quarter-on-quarter. Emerging markets managers returned $2.5 billion, a fall of 4.5% but still the fourth highest in nearly 25 years of quarterly analysis.

"Of the funds which we track in our emerging markets benchmark, most investments are made in emerging markets in Asia," said Ralph Jaeger, Cambridge Associates co-head of international private equity research.

"In the fourth quarter of 2010, nearly three-quarters of capital investments were made in that region. In the first quarter of 2011, that ratio stood at almost two-thirds of all invested capital in that period. Mainland China, the largest single country component of the index, representing over one-third of its total value, was a major beneficiary."

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• Topics
• Performance
• GPs
• Asia
• Performance