Investing in emerging markets such as China and India has turned more difficult in the past couple years.
But many of the venture capital and balanced funds in California Public Employees’ Retirement System’ 57 Stars Emerging Markets Fund portfolio show promise with noticeable progress over the past year.
The 12 funds that focus on early-stage, late-stage and a balanced strategy that includes growth investing are largely in the black. Nine of them had positive IRRs as of September last year, according to CalPERS’ most recent portfolio report. Three of them did not.
The funds are largely 2008 vintage investments. Two of them hail from 2007 and one from 2009. They are equally divided between small sized ($200 million or less) and mid sized ($201 million to $700 million). Two are larger.
The 57 Stars portfolio has the mandate to invest in private equity markets outside the United States and Western Europe.
Over the 12 months ended in September, eight of the funds posted improvements to their IRRs. Three saw their performance slip, and one fund’s IRR was unchanged. While the funds are mid-life and still in formative stages, the improvements are obviously a welcome sign.
Several standout funds are worth noting. Actis Africa 3 from 2008 topped the list with an 18.2% net IRR. New Horizon Capital III, vintage 2009, was second with a 13.9% IRR. Next in line was the 2008 GSR Ventures III with an 11.2% net IRR. The GSR Ventures fund pulled back from the 88.7% IRR it posted in September 2011.
At the bottom of the list are the 2008 Baring India Private Equity Fund III with a -7.4% net IRR and Evergreen 5 from 2007 with a -6% IRR.
The accompanying table includes the entire list of funds with their commitment levels, distributions and IRRs.