IBR's: Objective of Series
Objectives of The Investment Benchmarks Reports
Private equity has experienced many ups and downs since Thomson Financial first published performance data in 1989. Current investors in private equity have varying levels of expertise about how the industry works, but what they do have in common, is the need for data and analysis on the performance of the private equity industry on an individual fund basis and as an industry.
A key goal of Thomson Financial is to strive to provide aggregate industry data that will benefit both general partners and limited partners and therefore will support the growth of the private equity investment process.
The Investment Benchmarks Reports comprising of four volumes are published annually to respond to the need to assess the performance of individual private equity funds and portfolios of private equity funds.
The objectives of the reports are to provide the reader with a summary of returns to investors in private equity funds and with an analysis of the factors that influence those returns. This is accomplished through a consistent framework for assessing private equity fund performance. Specifically, the objectives of the report are to provide:
Fund Managers
- With reliable industry benchmarks to compare their funds’ progress to funds with the same year of formation and with those similar in size and investment philosophy through the vintage year analysis.
- With information to understand the private equity cycles to plan long-term investment strategies. A careful analysis of the economic environments in which different vintage year funds invest can point to the most favorable private equity investment periods.
- With information to manage potential investor expectations in the form of an economic overview of the private equity investment process for use in fund-raising presentations, annual meetings, and other documents.
- With documentation on the long-term nature of private equity investing over several economic cycles (note the long time period until initial distributions begin and paid-in capital is returned even for funds with excellent results).
Investors in Funds
- With information to correlate economic cycles with investment performance evidencing the need for counter-cyclicality in making investment decisions in this industry and reflecting the level of returns to expect in particular environments.
- With information to facilitate internal reporting on the progress and development of investments.
- With a better understanding of the trends in performance of funds with different investment strategies.
- With more information to evaluate a fund as part of the due diligence process, particularly about how to evaluate a fund’s interim performance to gain insight regarding ultimate returns.
- With assistance to evaluate private equity’s role in an overall risk diversification strategy and to develop asset allocation models.
