Australian private equity and venture capital investments have outperformed the S&P/ASX 300 Index over one, three and five years, but the performance was mixed when compared with the S&P/ASX Small Ordinaries Index.
The finding, by the Cambridge Associates LLC Australian Private Equity and Venture Capital (AVCAL) Index, was the result of combining data from 58 funds. The index, the result of a partnership between Cambridge and AVCAL, began in the second quarter of 2010 and the latest measure is to 31 December 2010.The Cambridge AVCAL index showed a return of 7.3 per cent over one year, versus 1.9 per cent for the S&P/ASX 300 Index, a return of 0.6 per cent over three years versus -5 per cent for the S&P/ASX 300, and 5.7 per cent over five years versus 4.4 per cent for broader market index.
However, the S&P/ASX Small Ordinaries Index outperformed the private equity index over the year, returning 13.1 per cent. It underperformed over three years, returning -5.9 per cent, and narrowly underperformed private equity over five years with a 5.5 per cent return. The Cambridge AVCAL index outperformed the UBS Australian Composite Bond Index and the UBS Bank Bill Index over one year, but the bond and bill gauges returned a respective 7.4 per cent and 5.2 per cent over three years when the worst of the global financial crisis slammed listed and unlisted equity in companies.
The Cambridge/AVCAL returns are net of fees, expenses and carried interest. AVCAL chief executive Katherine Woodthorpe said Australian private equity's outperformance over the one to five-year horizons was heartening. "It is also encouraging to see that funds raised in 2008, during the height of the global financial crisis, are already reporting strong interim performance numbers," Woodthorpe said.
