The private equity industry declined for the fifth consecutive quarter in the fourth quarter of 2008, dropping 16.32%, a near 800 basis point decline from the prior quarter, according to the State Street Private Equity Index.
Both domestic and international private equity returns declined in the fourth quarter. Domestic funds in the index reported a -14.69% return and international funds reported a -21.42% return during the same period. Despite the recent declines, the analysis of returns for Q4 2008 generated some positive results.
“Private equity funds generally held their ground better than public equities during the fourth quarter of 2008,” said William Pryor, senior vice president of State Street Investment Analytics.
In Q4 2008, the S&P 500 reported a -21.94% quarterly return, while the Russell 3000 reported an even larger -22.78% decline. The 500-600 basis point outperformance of p.e. versus public equity during the fourth quarter is notable, according to State Street, given that in Q3 2008, the p.e. return was only 0 to 30 basis points higher than these two public equity indices.