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Private equity funds see lower volatility in Covid-hit 2020

The latest research from eFront, the leading financial software and solutions provider dedicated to Alternative Investments, reveals that the global private equity market showed higher resiliency and lower volatility over the first two quarters of 2020 compared with public equity markets, as firms dealt with the fallout of the coronavirus crisis.However, the under-reaction of private markets exhibited in Q1 was not followed by the performance bounce back that public markets went through in Q2. 

The adverse effects of the economic slowdown lasted longer in the European private equity market than in other regions, with US and Asian funds performing more strongly.

The LBO market saw a moderate divergence in the top and bottom performing fund performance. Conversely, venture capital funds recorded a decline in manager selection risk.

Each vintage year has recorded a decrease in the multiple of invested capital during the first semester, with vintage years 2013 through 2016 taking the hardest hit.

The relatively low level of capital calls for vintage years 2017 and later recorded in the data may insulate that group of funds from the economic slowdown’s adverse effects.

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