The growing debt crisis in Europe and a strong US dollar heavily impacted global returns on alternative investments during last year’s third quarter.
Private equity and venture capital funds that invest primarily in developed markets outside the US as well as those that target emerging markets each posted a loss for the period. The last time funds of these asset classes in both developed and emerging markets recorded a negative quarter was for the three months ending June 30, 2010, according to Cambridge Associates LLC.
In US dollar terms, the Cambridge Associates LLC Global ex US Developed Markets Private Equity and Venture Capital Index dropped 8.4% for the quarter. The Cambridge Associates LLC Emerging Markets Private Equity and Venture Capital Index performed only marginally better, sliding 8.2%. Both, however, easily beat the returns of their comparable public market benchmarks, the MSCI EAFE and MSCI Emerging Markets, which fell 19.0% and 22.5%, respectively, for the period.
"The breadth of the global economic malaise in the third quarter was evident by the uniformly negative performance of funds in virtually every major region in both indices,” says said Miriam Schmitter, Managing Director and head of Cambridge Associates’ international private equity and venture capital research. “In the developed markets index, companies in the largest region by value in the index, the UK, fared best, losing only 6.2%, which helped prevent an even sharper fall for the index as a whole. In the emerging markets index, mainland China played a parallel role in helping to buoy the index’s performance. Mainland China was by far the largest region in the index, representing 38% of its value, and was also the best performer of the largest regions, posting a negative 6.2% return.”
