State Street’s GX Private Equity Index Shows Venture Capital is Only Private Equity Strategy to Have Returns Dip into the
Negative in Q1 2016
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.
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This press release is provided for informational purposes only and should not be considered investment advice. Any such views
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Exp. Date: 7/31/17
State Street Corporation
Julie Kane, 1 617-664-3001
jekane@statestreet.com
@StateStreet
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