In Search of Better Returns, Go Unlisted, Says Cambridge

Cambridge Associates found that private equity markets produced superior returns in the short and medium term.

Private equity markets in developed and emerging economies trumped the returns from listed stocks in the first quarter of the year, according to research from Cambridge Associates.

The consulting firm’s index of developed market private equity and venture capital funds outside the US gained 3.4% in the first three months of the year, compared to a 0.7% return from the MSCI EAFE index, the public market equivalent.

In the 12 months to the end of March 2014, the private equity index—Cambridge’s global ex-US developed markets private equity and venture capital Index—gained 20.9% versus a 17.6% return from the MSCI EAFE index. Longer term, private equity gained 14.1% in 10 years while listed markets rose by just 6.5%.

In emerging markets, private equity gained 14.4% in the same 12-month period while listed emerging market equities lost 1.1%. Private equity also beat the returns from listed markets in the three, five, and 10-year periods to the end of March, Cambridge said.

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