The State Street Global Exchange Private Equity Index (GXPEI) ended the first quarter of 2018 with a slight increase of 2.44 per cent.
The Buyout funds category ended its streak of eight quarters of outperformance with a 2.09 per cent gain, lagging behind the 3.78 per cent return from Venture Capital funds and 2.46 per cent from Private Debt funds.
The PEI is based on directly-sourced limited partnership data and represents more than USD2.8 trillion in private equity investments, with more than 2,800 unique private equity partnerships, as of 31 March.
“In the first quarter of 2018, volatility spiked across all asset classes amid an environment of continued geopolitical uncertainties, escalating risks of trade wars and rising interest rates,” says Will Kinlaw (pictured), senior managing director and global head of State Street Associates, a division of State Street Global Exchange. “Managers’ quarterly contribution rate dropped to a two year low and exit activities declined as well, indicating a tendency toward caution.”
During the first quarter of the year, all strategies saw quarterly decreases in the level of returns. Venture Capital led with a 3.78 per cent return, down from 4.21 per cent in Q4, while Private Debt funds saw 2.46 per cent, down from 3.15 per cent in Q4, and Buyout saw the largest drop, falling to 2.09 per cent from 5.23 per cent in Q4.
European-focused private equity funds experienced a 2.88 per cent quarterly gain in USD-denominated terms (0.41 per cent in EUR-denominated IRR); US-focused funds returned 2.44 per cent; and funds focused on the rest of the world gained 1.92 per cent.
Among sectors, Information Technology funds led with a 5.20 per cent quarterly return, down slightly from 5.91 per cent in Q4. They were followed by Financial funds – the only sector to see an increase in returns from the previous quarter – rising to 4.93 per cent from 2.66 per cent in Q4. Industrials, the leader for the previous two quarters, saw returns drop to 1.56 per cent from 6.68 per cent in Q4.