PE outpaces public stocks

Private equity firms continue to outperform the S&P 500, according to a report on the fourth quarter 2005 performance index by Thomson Financial (publisher of VCJ) and the National Venture Capital Association (NVCA). The index is based on returns from more than 1,800 private equity and VC partnerships.

Long-term performance for venture funds remained steady, with 20-year returns of 16.5 percent. Over 10 years, venture funds returned 23.7 percent.

Short-term performance also showed quarter-to-quarter stability, with one-year venture returns showing a small drop from 17.9% in Q3 2005 to 15.6% in Q4 2005.

“We are keeping our eyes firmly on the venture-backed exit markets in hopes that we will start to see a healthier IPO market in 2006,” said Mark Heesen, president of the NVCA. “Otherwise, we could begin to see the impact in performance across the board.”