MAY 15, 2025
Performance Cost to Increase Liquidity?
Annualized Returns March 2019 - June 2024
Why Evergreen Private Market Funds Can Win
Evergreen funds, with lower minimum investment thresholds and higher liquidity than traditional private market funds, reduce barriers to private market investing.
They also offer another advantage: faster capital deployment. By deploying investors’ capital more quickly, evergreen funds enable returns to start accruing sooner. Compounding can lead to annualized returns that may surpass those of traditional closed-end funds, which often hold "dry powder" (uninvested capital) for extended periods.
This chart from our 2025 Market Overview suggests evergreen funds have delivered comparable or slightly higher annualized returns than closed-end private equity funds and have frequently outperformed global benchmarks, though performance varies by fund and market conditions.
All Private Markets – Hamilton Lane’s definition of “All Private Markets” includes all private commingled funds excluding fund-of-funds and secondary fund-of-funds.
Private Equity – A broad term used to describe any fund that offers equity capital to private companies.
Index Definitions:
MSCI World Index – The MSCI World Index tracks large and mid-cap equity performance in developed market countries.
MAY 8, 2025
An Unappreciated Benefit of Private Markets Exposure
This week, we’re examining various investment strategy returns over a five-year period. Notice that over no five-year period did investors lose money in buyout, private credit or private infrastructure. Nor did they give up upside return, highlighting one of the great unappreciated benefits of private market exposure in your portfolio: the downside protection against risk.
DM Buyout – Includes any buyout fund that is primarily investing in developed markets of North America, Western Europe and Global.
VC/Growth – Includes all funds with a strategy of venture capital or growth equity.
Credit – This strategy focuses on providing debt capital.
Natural Resources – An investment strategy that invests in companies involved in the extraction, refinement, or distribution of natural resources.
Infrastructure – An investment strategy that invests in physical systems involved in the distribution of people, goods, and resources.
Real Estate – Any closed-end fund that primarily invests in non-core real estate, excluding separate accounts and joint ventures.
Index Definitions:
MSCI World Index – The MSCI World Index tracks large and mid-cap equity performance in developed market countries.
BofAML High Yield Index – The BofAML High Yield index tracks the performance of below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market.
S&P UBS Leveraged Loan Index – The S&P UBS Leveraged Loan Index represents tradable, senior-secured, U.S. dollar-denominated non-investment grade loans.
MSCI World Energy Sector Index – The MSCI World Energy Sector Index measures the performance of securities classified in the GICS Energy sector.
DJ Brookfield Global Infrastructure Index – The DJ Brookfield Global Infrastructure Index is designed to measure the performance of companies globally that are operators of pure-play infrastructure assets.
MAY 1, 2025
What percentage of your total book of business do you anticipate allocating to private markets in 2025?
Wealth Professionals Fuel Growth with Bigger Private Market Investments
Private wealth professionals aren’t just dabbling in the private markets—they’re committing. According to the Hamilton Lane Global Private Wealth Survey, 59% plan to allocate 10% or more of their books of business to private markets, up from 52% last year. Even more striking? 30% of advisors are aiming for 20% or more.
For years, institutional giants like pensions and endowments have allocated 24-50% to private market investments. Now, thanks to the rise of evergreen funds, private wealth clients can tap into the same advantages as institutions, such as access to unique, private companies, portfolio diversification and outperformance potential.
April 10, 2025
Gross Buyout Deal Return Dispersion
By Deal Year
Private Equity Outcomes: Europe’s Subtle Charms
U.S. private equity funds have a reputation for outperforming when compared to Europe. This week, we examined the performance of North American and European buyout deals. At first glance, the median performance is remarkably similar, with North America showing a slight edge in returns: 24% compared to 22%. On average, North American buyout funds offered higher outcomes.
However, North American deals come with a wider dispersion of outcomes, presenting the potential for exceptional highs but also significant lows. In contrast, European buyout deals display a narrower dispersion, reflecting more consistent and predictable performance trends. The difference: Europe’s median dispersion was 26% compared to 32% in North America, using internal rate of return (IRR) as a measurement.
The benefits of global diversification
This chart shows that European PE buyout funds may have the often overlooked benefit of more consistent results. It’s relevant as European investors now have more opportunities to invest closer to home, thanks to the introduction of European Long-Term Investment Funds (ELTIFs). Designed for non-professional investors, these funds allow them to support and benefit from their regional economy.
The findings also highlight the importance of global diversification in private market portfolios, balancing risks and opportunities across regions.
Dispersion: The variability or range of investment outcomes, such as returns, across different funds, deals, or strategies. IRR dispersion highlights the difference between the highest and lowest-performing investments.
April 3, 2025
Growth of $1
Charting the Growth of $1 in Public vs. Private Markets
This week, we are measuring the growth of $1 invested in various markets over the last 10 years. Notice that even with the recent underperformance, private equity has given investors much better returns over that period. The chart also shows what a difference the public comparable benchmark you use makes. The S&P 500, one of the world’s best performing indexes, is getting closer to private equity returns, now only about 5% lower. The MSCI is not close and, in fact, has returns that are comparable to what you are getting from private credit and real estate, two strategies with far different risk/return profiles compared to equity.
Learn more about our 2025 Market Overview.
Private Equity – A broad term used to describe any fund that offers equity capital to private companies.
Real Estate – Any closed-end fund that primarily invests in non-core real estate, excluding separate accounts and joint ventures.
Credit – This strategy focuses on providing debt capital.
Index Definitions:
S&P 500 Index – The S&P 500 Index tracks 500 largest companies based on market capitalization of companies listed on NYSE or NASDAQ.
MSCI World Index – The MSCI World Index tracks large and mid-cap equity performance in developed market countries.
March 27, 2025
15% more advisors say they're advanced in private markets compared to last year
Are You a Private Markets Expert? More Advisors Say “Yes.”
The rising interest in private markets among private wealth investors is pushing advisors to sharpen their expertise. According to the Hamilton Lane Global Private Wealth Survey, 63% of advisors now rate themselves as “advanced” in private markets—up from 55% last year—showing greater confidence in discussing trends, products and strategies.
What’s behind the trend? The increasing availability of evergreen funds which offer more flexibility and liquidity than traditional funds is making private markets more accessible to private wealth investors. Mastering this asset class not only expands investment options but also creates valuable diversification opportunities for existing clients and prospective investors. As one U.S. RIA put it, “Clients expect us to access investment strategies they can’t just buy on their own.”
Venture Capital & Growth Drive Private Equity’s Historic Outperformance
This week’s chart highlights the 10-year rolling performance of private equity strategies and the MSCI World Index, showcasing how venture capital and growth equity funds have produced stellar returns for much of the past decade. While there has been considerable focus on post-2021 venture performance, private markets are a long-term asset class. Despite recent declines, both venture capital and growth equity continue to outpace other strategies and demonstrate the potential to consistently drive outsized returns relative to public equities over the long term. Regardless of macro volatility and market cycles, venture and growth continue to generate premium historical returns that investors cannot access from listed equities.
Private equity portfolios without venture and growth strategies may experience higher tracking errors to private equity benchmarks. While venture capital’s greater dispersion of returns across market cycles offers substantial long-term return potential, we underscore the importance of prudent portfolio construction and best-in-class manager selection for LPs to secure the best potential risk-adjusted returns for the asset class.
Growth Equity: Any PM fund that focuses on providing growth capital through an equity investment.
Venture Capital: Venture Capital incudes any PM fund focused on any stages of venture capital investing, including seed, early-stage, mid-stage, and late-stage investments.
MSCI World Index: The MSCI World Index tracks large and mid-cap equity performance in developed market countries.
December 26, 2024
Dispersion of Buyout IRRs by Fund Size
Ordered by Spread of Returns, Vintages 2013 - 2023
Fund Size ≠ Average Returns
Taking the crown in our Top of the Charts series is Fund Size ≠ Average Returns. In this chart, we examine the differences in dispersion of small-cap buyout, middle-market buyout and mega/large buyout. Interestingly, the median IRRs do not differ drastically between the three fund sizes, all hovering in the mid-teens. This suggests there is not a strong correlation between fund size and median returns.
Top-quartile, middle-market managers, however, have historically posted stronger returns than their peers in the mega/large space. While top-quartile returns are high, the dispersion of returns for middle-market buyout also remains wide, showing the upside potential and downside risk. That dynamic stands in contrast to mega/large funds, which exhibit a tighter dispersion. This relationship is even further pronounced when looking at small-cap buyout relative to the other buyout buckets. Strategic planning and prudent manager selection remain crucial to targeting outperformance, especially in small-cap and middle-market investing where the wider dispersion of outcomes can introduce more downside portfolio risk considerations.
SMID Buyout – Any buyout fund smaller than a certain fund size, dependent on vintage year.
Mega/Large Buyout: Any buyout fund larger than a certain fund size that depends on the vintage year.
December 19, 2024
All Private Markets Rate of Distribution
Current Rate of Distributions vs. Pre-2021
Placing 2nd in our Top of the Charts year-in-review is The Current Rate of Distributions vs. Pre-2021. And for good reason. We focus a lot on risk and return, but liquidity is another major consideration when thoughtfully constructing private market portfolios. In this chart, we observe the rate of distribution across all private markets as the total amount of distributions as a percentage of NAV. Also shown are the annual amounts to illustrate the magnitude of distributions per year, demonstrating distribution activity in two ways. Investors experienced diminished distribution activity in 2023 compared to the record amounts in 2021 and 2022, and it is unlikely to see distributions of that magnitude based on 1H 2024.
Distribution rates, however, show some evidence of recovery from the all-time lows they saw in 2023, which was the lowest annualized rate of distribution over the past 10 years. This can be attributed to minimal exit activity during that year, but it appears to have begun picking up traction in the start of 2024. Still, the distribution pacing declines are more a function of NAV growth, rather than a massive decline in absolute distributions, as distributions continue to be on pace or exceed those of pre-2021 levels.
Choose Wisely: Sector Composition Can Impact Performance
Not only is strategy allocation an important portfolio construction consideration, but sector composition within the portfolio is also a key component to proper portfolio management. In this week's chart, we examine the sector composition of private equity deals over time and observe noticeable shifts. The information technology sector has (unsurprisingly) become more popular while we have noticed a decline in the number of consumer discretionary deals in recent years. Sectors such as industrials, health care and financials have neither waxed nor waned in popularity. The upshot? Savvy LPs should keep underlying sector diversification in mind when building their portfolios, especially as some sectors may exhibit more cyclicality than others.
October 10, 2024
Private and Public Infrastructure Returns (2014-2024 Q1)
Infrastructure Builds Historically Resilient Portfolios
In today’s unpredictable market, many investors are seeking stability in their portfolios. This week’s chart shines a spotlight on why private infrastructure stands out as a resilient investment option. Infrastructure is recognized for its potential to generate stable returns with low volatility. But unlike public equities and public infrastructure, which are often swayed by market fluctuations and investor sentiment, private infrastructure assets have historically provided more consistent performance. Additionally, private infrastructure exhibits low correlation with public equities (0.46), public infrastructure (0.35), and even private equity (0.65), offering valuable diversification potential and bolstering portfolio resilience during uncertain times.
Infrastructure – An investment strategy that invests in physical systems involved in the distribution of people, goods, and resources.
Index Definitions:
Credit Suisse High Yield Index – The Credit Suisse High Yield index tracks the performance of U.S. sub-investment grade bonds.
MSCI World Index – The MSCI World Index tracks large and mid-cap equity performance in developed market countries.
DJ Brookfield Global Infrastructure Index – The DJ Brookfield Global Infrastructure Index is designed to measure the performance of companies globally that are operators of pure-play infrastructure assets.
High Sharpe ratio, anyone?
Infrastructure may be a relatively nascent asset class for investors, but it has quickly become a key component in many portfolios due to favorable return characteristics, including low correlation to other asset classes and the potential for both downside protection and an inflation hedge. Our data shows that private infrastructure has historically achieved a notably higher total return compared to public infrastructure alternatives and with lower volatility – even after adjusting for smoothing effects in performance reporting. High Sharpe ratio, anyone?
Sharpe Ratio – The Sharpe Ratio is the average return earned in excess of the risk-free rate per unity of volatility or total risk.
Time-weighted Return – Time-weighted return is a measure of compound rate of growth in a portfolio.
Natural Resources – An investment strategy that invests in companies involved in the extraction, refinement, or distribution of natural resources.
Volatility – Volatility is a statistical measure of dispersion of return, specifically standard deviation.
Index Definitions:
Credit Suisse High Yield Index – The Credit Suisse High Yield index tracks the performance of U.S. sub-investment grade bonds.
DJ Brookfield Global Infrastructure Index – The DJ Brookfield Global Infrastructure Index is designed to measure the performance of companies globally that are operators of pure-play infrastructure assets.
MSCI World Index – The MSCI World Index tracks large and mid-cap equity performance in developed market countries.
September 26, 2024
Dispersion of Buyout IRRs by Fund Size
Ordered by Spread of Returns, Vintages 2013 - 2023
Fund Size ≠ Average Returns
This week we examine the differences in dispersion of small-cap buyout, middle-market buyout and mega/large buyout. Interestingly, the median IRRs do not differ drastically between the three fund sizes, all hovering in the mid-teens. This suggests there is not a strong correlation between fund size and average returns.
Top-quartile, middle-market managers, however, have historically posted stronger returns than their peers in the mega/large space. While top-quartile returns are high, the dispersion of returns for middle-market buyout also remains wide, showing the upside potential and downside risk. That dynamic stands in contrast to mega/large funds, which exhibit a tighter dispersion. This relationship is even further pronounced when looking at small-cap buyout relative to the other buyout buckets. Small-cap buyout displays the highest top-quartile returns, while also having a sizable increase in return dispersions. Strategic planning and prudent manager selection remain crucial to targeting outperformance, especially in small-cap and middle-market investing where the wider dispersion of outcomes can introduce more downside portfolio risk considerations.
SMID Buyout – Any buyout fund smaller than a certain fund size, dependent on vintage year.
Mega/Large Buyout: Any buyout fund larger than a certain fund size that depends on the vintage year.
Current Rate of Distributions vs. Pre-2021
We focus a lot on risk and return, but liquidity is another major consideration when thoughtfully constructing private market portfolios. In this week’s chart, we observe the rate of distribution across all private markets as the total amount of distributions as a percentage of NAV. Also shown are the annual amounts to illustrate the magnitude of distributions per year, demonstrating distribution activity in two ways. Investors experienced diminished distribution activity in 2023 compared to the record amounts in 2021 and 2022, and it is unlikely to see distributions of that magnitude based on 1H 2024.
Distribution rates, however, show some evidence of recovery from the all-time lows they saw in 2023, which was the lowest annualized rate of distribution over the past 10 years. This can be attributed to minimal exit activity during that year, but it appears to have begun picking up traction in the start of 2024. Still, the distribution pacing declines are more a function of NAV growth, rather than a massive decline in absolute distributions, as distributions continue to be on pace or exceed those of pre-2021 levels.
September 4, 2024
All Private Equity 10-Year Rolling TWRs
Want Historically Premium Returns? See PE.
For this week’s chart, we explore 10-year annualized returns on a rolling basis. Over a long time horizon, private equity has bested listed equities over most 10-year periods and across various market cycles. In fact, when compared to the MSCI World index, private equity outperforms in every time frame. Even when taking into account the most recent period of public market volatility, private equity continues to substantially outperform.
Private equity outperformance is typically most pronounced during periods of mediocre or negative public market returns. This disparity arises more from the volatility in public markets than from the nature of private markets themselves. When public markets are strong, private equity's outperformance diminishes; in any other environment, it increases. Regardless of market volatility and market cycles, private equity continues to generate premium returns that investors cannot access from listed equities.
Time-weighted Return – Time-weighted return is a measure of compound rate of growth in a portfolio.
S&P 500 Index – The S&P 500 Index tracks 500 largest companies based on market capitalization of companies listed on NYSE or NASDAQ.
MSCI USA Small Cap Value Index – The MSCI USA Small Cap Index is designed to measure the performance of the small cap segment of the U.S. equity market.
MSCI World Index – The MSCI World Index tracks large and mid-cap equity performance in developed market countries.
Volatility – Volatility is a statistical measure of dispersion of return, specifically standard deviation.
When Saying "No" Can Add 2 – 3%
Top-quartile fund performance can be one of the many drivers in a private markets portfolio. However, there is also meaningful upside to avoiding bottom-quartile funds. Shown this week is the impact of top and bottom-quartile funds by vintage year for all private markets funds. It’s important to note that even without the top-quartile funds (dark blue), on a pooled IRR basis, private markets have still performed quite well.
That begs the question of how much alpha can be added by only selecting top-quartile funds. While this varies by vintage year, the chart illustrates that roughly 3-5% can be added by selecting top-quartile funds. That is a substantial premium that comes with good portfolio management. While everyone strives for the best of the best, what can be said of simply avoiding the bottom-quartile funds? Does that have as drastic of an impact to pooled performance? Not quite; however, roughly 2-3% can be added by avoiding bottom-quartile funds. In either scenario, the importance of portfolio management is evident and careful manager selection – knowing who to choose and avoid – can drastically impact returns.
August 22, 2024
Cumulative Returns During a Crisis
Buyout vs. Global Equities Cumulative Returns
Will M&A Accelerate PE Performance in 2024?
A common question we hear among investors is what to expect from private equity during market crises and downturns. We’ve looked at a few significant market crisis environments: The dotcom bubble in the early 2000s as well as the Global Financial Crisis (GFC) and compared them to equity market drawdowns over 2022 and portions of 2023. During both the dotcom and GFC eras, the public market decline continued well past three quarters and took five to six years to reach breakeven. The downturns in buyout, however, were much more muted than those of the public markets. In addition to taking less of a hit, the private markets recovered sooner than public markets during both crisis periods.
At the start of 2022, we saw another market downturn, though much less severe than previous eras. Private markets once again showed more resilience and muted aspects, including breaking even prior to the publics. But there’s something noticeably different this time around: The sharp rebound in the public markets from 2023 through 1H 2024 has not yet been matched by the private markets. Perhaps a rebound in M&A activity will provide a boost to private markets... It is safe to say, however, that the downturn seen in 2022 is nothing like what we saw in the dotcom bubble or GFC era.
MSCI World Index: The MSCI World Index tracks large and mid-cap equity performance in developed market countries.
August 15, 2024
Sizing Considerations
Distribution of Portfolio Returns - 1 Fund Per Year
Distribution of Portfolio Returns - 10 Funds Per Year
Diversification: Increasing the Likelihood of Success
We’re celebrating Chart of the Week’s first anniversary with one of the charts you all found most interesting over the past year: the distribution of portfolio returns.
The goal of successful portfolio management is mitigating downside risk while creating the best chance of achieving your target returns. Diversification plays a major factor in that success. Here we see the return distribution of portfolios of varying levels of diversification by strategy. The first chart shows the distribution of returns for portfolios investing in one fund every vintage year. The second chart shows increasing the portfolio to invest in 10 funds each vintage. As you would expect, the dispersion of returns is wider for the more concentrated portfolio.
When the number of funds per year is increased from one to 10, the spread of returns tightens drastically. Credit and infrastructure have limited upside potential in this scenario, but they have the tightest dispersion and therefore greatest likelihood of achieving a set return. Narrowing the dispersion in any strategy increases the certainty of portfolio return, which reduces idiosyncratic risk. These figures do not imply optimal diversification but rather illustrate the impact of diversification in portfolios. Importantly, careful manager selection may also increase the likelihood of achieving target returns.
Credit: This strategy focuses on providing debt capital.
Growth Equity: Any PM fund that focuses on providing growth capital through an equity investment.
Infrastructure: An investment strategy that invests in physical systems involved in the distribution of people, goods, and resources.
VC/Growth: Includes all funds with a strategy of venture capital or growth equity.
August 8, 2024
Public vs. Private Company Universe
Where $100+ Million Companies Thrive
This chart shows public and private companies with revenue greater than $100 million over the last 12 months.
Private equity can represent a target-rich environment, the market potential of which studies show is larger compared to publicly traded companies.
Globally, there are over 140,000 private companies with annual revenues over $100 million vs. approximately 19,000 public companies with the same annual revenues.
This highlights the breadth of investment opportunities available in the private capital universe, where the opportunity set across different strategies, sectors and regions is likely to be much wider and more available than the public landscape. As such, we believe that private markets offer investors the unique potential to outperform and diversify their overall portfolio.
Sourcing Outsized Returns
This week we’re focusing on interquartile range of funds’ IRR that are bucketed into three implementation strategies across private equity.
The lowest interquartile range in returns is in secondary funds, highlighting its potential for relatively lower risk implied by lower dispersion in returns. More diversification and robust investment selection in co-investment funds are particularly important to be prudent about and are implied by the highest interquartile range vs. primaries or secondaries.
It is important to note that this is not considering the top and bottom deciles of the dispersion. Although the interquartile range for co-investment funds is higher, the top decile could also be higher, implying both higher expected return and risk. Co-investments also typically show a longer tail on the right of their return distribution, emphasizing the potential for strong, outsized returns if investors have capable sourcing, investment selection and risk management skills.
Secondary FoF: A fund that purchases existing stakes in private equity funds on the secondary market.
June 13, 2024
Duration by Fund Strategy
By Number of Years, For Liquidated Funds
How Long Should You Stay Invested?
Understanding the duration of an investment can be helpful in assessing the illiquidity of closed-end primary funds. In this week’s analysis, we calculate “implied duration” for different private markets strategies. In other words, how much time, on average, is capital at work for a private markets fund?
Infrastructure and credit origination funds demonstrate shorter implied durations – often less than four years. This expedited recuperation period can indicate lower liquidity risk exposures for investors, as capital is returned more swiftly. In contrast, higher risk and returning strategies such as venture capital see an extended duration as their underlying assets take longer to generate and return value.
Understanding the duration of illiquid assets is vital for making proactive portfolio changes that align with an investor’s strategic goals and capital needs. This nuanced approach to portfolio construction is important for LPs seeking to balance their portfolio’s return, risk and liquidity across private market investments.
Credit: This strategy focuses on providing debt capital.
Growth Equity: Any PM fund that focuses on providing growth capital through an equity investment.
Infrastructure: An investment strategy that invests in physical systems involved in the distribution of people, goods, and resources.
Mega/Large Buyout: Any buyout fund larger than a certain fund size that depends on the vintage year.
Natural Resources: An investment strategy that invests in companies involved in the extraction, refinement, or distribution of natural resources.
Origination: Includes any PM fund that focuses primarily on providing debt capital directly to private companies, often using the company’s assets as collateral.
Real Estate: Any closed-end fund that primarily invests in non-core real estate, excluding separate accounts and joint ventures.
SMID Buyout: Any buyout fund smaller than a certain fund size, dependent on vintage year.
Venture Capital: Venture Capital includes any PM fund focused on any stages of venture capital investing, including seed, early-stage, mid-stage, and late-stage investments.