Fund performance: Ventures’ rebound aside, mid-decade funds make modest gains

Venture capital has been on a rebound over the past several years, not just generating double-digit returns, but showing itself as the only private equity asset class to out perform the U.S. public market benchmarks.

You would never know it from the performance of many mid-decade funds. This is particularly true in the Oregon Public Employees Retirement Fund portfolio.

The majority of the funds advanced over the year ended in March 2015. But gains were often small and IRRs don’t yet look extraordinary. That is with the obvious exception of Union Square Ventures’ 2004, which during the period threw off a mountain of distributions to LPs.

The portfolio has 20 venture capital funds and funds of funds with vintages of 2003 to 2006. Almost half are funds of funds, which may help explain the moderate gains. But there are also funds from Essex Woodlands Health Ventures, Technology Crossover Ventures and Opus Capital.

During the 12 months from March 2014 to March 2015, two-thirds of the funds saw their IRRs improved, according to a recent portfolio report. But gains were often small. The Pathway Private Equity Fund III from 2005 saw its IRR rise to 9.8 percent from 9.5 percent. Northwest Emerging Ventures, another fund of fund also from 2005, posted an IRR of 6.7 percent as of March 2015, up from 6.6 percent a year earlier, according to the report.

Union Square Ventures 2004 is in a different class. The fund tops the portfolio with an IRR of 67.7 percent as of March 2015. While that is down, the fund’s distributions are up substantially. As of March, Oregon’s $22.3 million investment generated $279.7 million in distributions. That is up from $137.1 million a year earlier.

The accompanying table lists the 20 funds with their commitments, distributions and IRRs.