State Street’s GX Private Equity Idx Shows Venture Capital is Only Private Equity Strategy to Have Returns Dip into the Neg...
August 10 2016 - 12:26PM
Business Wire
Overall Returns Remain Relatively Flat from Q4 2015 to Q1
2016
State Street Corporation (NYSE:STT) today announced the results
of its GX Private Equity IndexSM, a benchmark for comparative
analysis of private equity performance, which includes a
comprehensive data set dating back to 1980. In the first quarter of
2016, the index saw an overall return of 0.65 percent.
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PEI infographic (Graphic: Business
Wire).
“During the first quarter of 2016 the return on US-focused funds
remained flat from the fourth quarter of 2015,” said Will Kinlaw,
senior managing director and global head of State Street
Associates, a division of State Street Global Exchange. “Due to the
lag in valuation reporting, this release does not yet include the
United Kingdom’s decision to leave the European Union in late June
2016, but ahead of Brexit, European-focused private equity funds
posted another strong quarter.”
The Index is based on directly sourced limited partnership data
and represents more than $2 trillion in private equity investments,
with more than 2,500 unique private equity partnerships, as of
March 31, 2016.
Additional First Quarter Highlights Include:
- The return of US-focused funds remained
unchanged from the previous quarter. Among all three main
strategies, Venture Capital posted a loss of -2.06%, while Buyout
and Private Debt funds recorded 0.67% and 0.32% gains,
respectively. For the one-year return, US private equity funds
recorded a 2.8% gain.
- The rolling one-year return of Venture
Capital presented a downward trend, dropping to 5.86% in Q1 2016
from 29.4% at its peak in Q2 2014.
- Although European-focused private
equity funds booked another strong quarter (3.51% in USD
denominated return) this is due to a tailwind from the exchange
rate. The EUR-denominated return was -1.26%, with the EUR
appreciating about 4.9% in Q1 2016, then dropping 2.5% in Q2.
- In terms of cash flow ratios,
European-focused funds have the most exit activity over the past
three years, with a Distribution to Commitment (DCC) ratio of 1.18.
Meanwhile, funds in Emerging markets and Asia-Pacific region have
more new active deals than the other regions, with a Paid-In
Capital to Commitment (PICC) ratio of 1.10.
“Public market uncertainty and larger macro-economic concerns
likely caused the decline in returns for Venture Capital during the
quarter,” said Anthony Catino, managing director, Alternative
Investment Solutions for State Street. “Despite this decline, we
continue to see investors, specifically Limited Partners and Asset
Owners, who understand these returns have historically been
cyclical, using Venture Capital funds as a diversification
mechanism and increasing their exposure to the asset class.”
For additional insights, or to learn more about the GX Private
Equity Index please visit http://www.ssgx.com/peindex.
About State Street
State Street Corporation (NYSE: STT) is one of the world's
leading providers of financial services to institutional investors,
including investment servicing, investment management and
investment research and trading. With $27.78 trillion in assets
under custody and administration and $2.3 trillion* in assets under
management as of June 30, 2016, State Street operates in more than
100 geographic markets worldwide, including the US, Canada, Europe,
the Middle East and Asia. For more information, visit State
Street’s website at www.statestreet.com.
* Assets under management were $2.30 trillion as of June 30,
2016. AUM reflects approx. $40 billion (as of June 30, 2016) with
respect to which State Street Global Markets, LLC (SSGM) serves as
marketing agent; SSGM and State Street Global Advisors are
affiliated.
Past performance is no guarantee of future results.
Performance of an index is not illustrative of any particular
investment. It is not possible to invest directly in an index.
State Street Corporation One Lincoln Street, Boston, MA
02111-2900.
© 2016 State Street Corporation - All Rights Reserved
Important Information:
Investing involves risk including the risk of loss of
principal.
This press release is provided for informational purposes only
and should not be considered investment advice. Any such views are
subject to change at any time based upon market or other conditions
and State Street disclaims any responsibility to update such views.
Neither State Street nor the speaker can be held responsible for
any direct or incidental loss incurred by applying any of the
information offered. Please consult your tax or financial advisor
for additional information concerning your specific situation.
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State Street CorporationJulie Kane, 1
617-664-3001jekane@statestreet.com@StateStreet
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