State Street Unveils Private Equity Index

Nov 27 2007 | 10:47am ET

State Street is getting into the private equity index game with the launch of an eponymous product. The State Street Private Equity Index is based on the latest quarterly statistics from the firm’s investment analytics group, which provides detailed analyses of customers’ private equity portfolios through an automated environment.

The State Street Private Equity Index, which will include data from more than 1,300 private equity partnerships with a total fund size in excess of $1.1 trillion, will allow private equity investors to evaluate their performance against their peers across a broad and representative sample of investments. Unlike other indices, the State Street Private Equity Index does not rely on voluntary reporting of cash flows from general partners in order to calculate returns. As a result, the firm believes that the index provides an accurate representation of private equity holdings across all funds, without any reporting bias.

“The industry has been seeking a more robust source of comparative information for private equity performance and more importantly, peer group analysis,” said William Pryor, senior vice president. “Private equity investors now have a benchmark as well as an additional layer of transparency to analyze their private equity holdings.”

The new index includes data derived from the diverse client base of The Private Edge Group, which covers public and private pensions, endowments and foundations, representing more than 4,000 commitments totaling over $150 billion.

“The industry has long awaited a third party private equity index based on consistent and reliable data,” said Chris Ailman, chief information officer of CalSTRS.  “State Street’s index will be a tremendous asset in evaluating our holdings which will provide us the information necessary to make strategic business decisions.”

The table below summarizes the composition and breadth of the index by major private equity strategy, in addition to the respective long-term internal rates of return (IRR):

State Street Private Equity Index

Composition as of June 30, 2007

Strategy   Number of Funds   Commitments ($B)   Long-term IRR%
Buyout   586   $801   15.79%
Venture Capital   567   $199   13.23%
Other   156   $135   14.55%
Total   1,309   $1,135   15.29%

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