Q4 2023 Quarterly Market Brief

Private Markets Overview

A proprietary series of charts from our extensive fund database designed to provide a snapshot of key private markets data on a quarterly basis. Our Market Brief includes all Q4 2023 data, including investment activity, distributions, fundraising and performance.

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  • 2023 fundraising is projected to slow down in comparison to 2022
  • Private equity still makes up the largest share of fundraising

Closed-End Fundraising by Asset Class
USD in Billions

Global Private Markets Fundraising


  • Private equity and private credit outperform over intermediate and long-term time periods on both an absolute and risk-adjusted basis
  • Real estate performance in longer time horizons is heavily influenced by GFC-era funds
  • Natural resources underperform in short- and medium-term time horizons

5-Year Asset Class Performance

Annualized Time-Weighted Return as of 9/30/2023

10-Year Asset Class Performance

Annualized Time-Weighted Return as of 9/30/2023

15-Year Asset Class Performance
Annualized Time-Weighted Return as of 9/30/2023

  • Despite market volatility in 2022 that has continued into 2023, private equity continues to perform at a high level historically, and significantly outperforms credit and real assets
  • Even with a recent downturn, private credit shows more consistent return compared to private equity and real assets
  • Volatility among energy funds weighs on real assets returns

5-Year Rolling Performance

10-Year Rolling Performance

15-Year Rolling Performance

Worse Comes to Worst

  • The opportunity for strong outperformance exists in private markets even in the most productive times for public markets

Highest 5-Year Annualized Performance

  • The best 5-year periods for all private asset classes outperform or hold steady with their public benchmarks

Lowest 5-Year Annualized Performance

Contributions & Distributions

  • 2022 and 2023 contribution activity fell relative to record highs in 2021
  • 2023 absolute contributions are consistent with pre-2021 levels.

All Private Markets Rate of Contribution

  • Distribution activity in 2023 fell significantly from the record-breaking activity in 2021 and 2022
  • However, 2023 total exit activity fell in line with expectations from the 2017-2020 period

All Private Markets Rate of Distribution


  • After a decline in 2022, Q3 NAV in 2023 is back to 2021 peak levels.
  • Buyout funds are driving the 2023 NAV “recovery”, but NAV is up in each asset class compared to 2022 levels.

NAV by Strategy
USD in Billions

Sentiment Indicators

  • Activity in the buyout market is slowing with managers sentiment pointing to a lower rate of contribution and longer times between fundraises

Hamilton Lane Sentiment Indicators | Buyout

  • The credit market is trending slightly positive, but activity is set to slow down similarly to buyout
  • The decline in coverage ratios is an indicator to be watched in 2024

Hamilton Lane Sentiment Indicators | Credit

  • The real estate and infrastructure markets are trending positively

Hamilton Lane Sentiment Indicators | Real Estate & Infrastructure

What It All Means

  • All strategies have lower levels of worry today compared to 2022 and 2023 except for credit, which has roughly the same worry between the start of 2023 and today

The Hamilton Lane Worry Index
A Composite of Hamilton Lane's Sentiment Indicators — Higher Numbers = More Worry

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Strategy Definitions
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. 
Co/Direct Investment Funds – Any PM fund that primarily invests in deals alongside another financial sponsor that is leading the deal.
Continuation Vehicles – A vehicle in which secondary buyers acquire one or more assets from an existing fund.
Corporate Finance/Buyout – Any PM fund that generally takes control position by buying a company.
Credit – This strategy focuses on providing debt capital.
Distressed Debt – Includes any PM fund that primarily invests in the debt of distressed companies.
EU Buyout – Any buyout fund primarily investing in the European Union.
Fund-of-Funds (FoF) – A fund that manages a portfolio of investments in other private equity funds. 
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.
Late Stage VC – A venture capital strategy that provides funding to developed startups.
Mega/Large Buyout – Any buyout fund larger than a certain fund size that depends on the vintage year.
Mezzanine – Includes any PM fund that primarily invests in the mezzanine debt of private companies.
Multi-Stage VC – A venture capital strategy that provides funding to startups across many investment stages. 
Natural Resources – An investment strategy that invests in companies involved in the extraction, refinement, or distribution of natural resources. 
Open-ended fund (OEF) – A semi-liquid private market fund that has no set term or duration
Origination – Includes any PM fund that focuses primarily on providing debt capital directly to private companies, often using the company’s assets as collateral. 
Private Equity – A broad term used to describe any fund that offers equity capital to private companies. 
Real Assets – Real Assets includes any PM fund with a strategy of Infrastructure, Natural Resources, or Real Estate. 
Real Estate – Any closed-end fund that primarily invests in non-core real estate, excluding separate accounts and joint ventures.
ROW – Any fund with a geographic focus outside of North America and Western Europe. 
ROW Equity – Includes all buyout, growth, and venture capital-focused funds, with a geographic focus outside of North America and Western Europe.
Secondary FoF – A fund that purchases existing stakes in private equity funds on the secondary market. 
Seed/Early VC – A venture capital strategy that provides funding to early-stage startups. 
SMID Buyout – Any buyout fund smaller than a certain fund size, dependent on vintage year.
U.S. Mega/Large – Any buyout fund larger than a certain fund size that depends on the vintage year and is primarily investing in the United States.
U.S. SMID – Any buyout fund smaller than a certain fund size that depends on the vintage year and is primarily investing in the United States.
U.S. & EU Growth – Includes all growth equity funds investing in North America and Western Europe.
U.S. & EU VC – Includes all venture capital funds investing in North America and Western Europe.
VC/Growth – Includes all funds with a strategy of venture capital or growth equity.
Venture Capital – Venture Capital incudes any PM fund focused on financing startups, early-stage, late stage, and emerging companies or a combination of multiple investment stages of startups. 

Index Definitions
Barclays U.S. Corporate Aggregate Index – Tracks the performance of U.S. fixed rate corporate debt rated as investment grade.
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. 
Credit Suisse High Yield Index – The Credit Suisse High Yield index tracks the performance of U.S. sub-investment grade bonds.
Credit Suisse Leveraged Loan Index – The CS Leveraged Loan Index represents tradable, senior-secured, U.S. dollar-denominated non-investment grade loans.
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. 
FTSE/NAREIR All Equity REIT Index – The FTSE/NAREIT All Equity REIT Index tracks the performance of U.S. equity REITs. 
HFRI Composite Index – The HFRI Composite Index reflects hedge fund industry performance.
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 Energy Sector Index – The MSCI World Energy Sector Index measures the performance of securities classified in the GICS Energy sector.
MSCI World Index – The MSCI World Index tracks large and mid-cap equity performance in developed market countries.
Russell 3000 Index – The Russell 3000 Index is composed of 3000 large U.S. companies, as determined by market capitalization.
S&P 500 Index – The S&P 500 Index tracks 500 largest companies based on market capitalization of companies listed on NYSE or NASDAQ.  

Desmoothing – A mathematical process to remove serial autocorrelation in the return stream of assets that experience infrequent appraisal pricing, such as private equity. Desmoothed returns may more accurately capture volatility than reported returns. The formula used here for desmoothing is: 
    Where rD(t) = the desmoothed return for period t, r(t) = the return for period t, ρ = the autocorrelation
    rD(t) = (r(t) – r(t-1) * ρ) / (1 – ρ)
PME (Public Market Equivalent) – Calculated by taking the fund cash flows and investing them in a relevant index. The fund cash flows are pooled such that capital calls are simulated as index share purchases and distributions as index share sales. Contributions are scaled by a factor such that the ending portfolio balance is equal to the private equity net asset value (equal ending exposures for both portfolios). This seeks to prevent shorting of the public market equivalent portfolio. Distributions are not scaled by this factor. The IRR is calculated based off of these adjusted cash flows.
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.
Volatility – Volatility is a statistical measure of dispersion of return, specifically standard deviation.  
MSCI World used as proxy for public equities.

Hamilton Lane estimates are based on a regression of quarterly public market index returns against quarterly private market index returns. This regression generates an alpha and a beta by strategy which can be used into the single-index model of pricing assets (Sharpe 1964, Linter 1965). One all inputs are obtained, we create a 75% confidence interval for our expected returns. This should denote the inherent uncertainty in these sorts of predicts. During periods of outsized positive or negative returns in the public markets, we’d expect to be less accurate or for the confidence interval to expand meaningfully. 

If a data set is distributed normally, about 95% of all data points will lie within two standard deviations of the mean.

The Hamilton Lane Worry Index (“HLWI”) is a composite view of a wide range of macroeconomic indicators across Buyout, Credit, and Real Assets. Indicators are scaled from 0 to 100 based on their relative value each year, and then averaged to create a market-wide number. Lower numbers represent a generally more favorable environment while high numbers signal a generally less favorable environment. The HLWI is directional and not necessarily indicative of future results.

Indices used: Hamilton Lane All Private Markets with volatility de-smoothed; Hamilton Lane All Private Equity ex. Credit and Real Assets with volatility de-smoothed; S&P 500 Index; Russell 3000 Index; MSCI World Index; HFRI Composite Index; Hamilton Lane Private Credit with volatility de-smoothed; Credit Suisse High Yield Index; Barclays Aggregate Bond Index; Hamilton Lane Private Real Estate with volatility de-smoothed; Hamilton Lane Private Infrastructure with volatility de-smoothed; Hamilton Lane Private Natural Resources with volatility de-smoothed; FTSE/NAREIT Equity REIT Index; DJ Brookfield Global Infrastructure Index; MSCI World Energy Sector Index. Geometric mean returns in USD. Assumes risk free rate of 2.4%, representing the average yield of the ten-year treasury over the last fifteen years.
This document has been prepared solely for informational purposes and contains confidential and proprietary information, the disclosure of which could be harmful to Hamilton Lane. Accordingly, the recipients of this document are requested to maintain the confidentiality of the information contained herein. This document may not be copied or distributed, in whole or in part, without the prior written consent of Hamilton Lane.

There are a number of factors that can affect the private markets which can have a substantial impact on the results included in this analysis. There is no guarantee that this analysis will accurately reflect actual results which may differ materially. These valuations do not necessarily reflect current values in light of market disruptions and volatility experienced in the fourth quarter of 2020, particularly in relation to the evolving impact of COVID-19, which is affecting markets globally.

The information contained in this presentation may include forward-looking statements. Forward-looking statements include a number of risks, uncertainties and other factors beyond our control which may result in material differences in actual results, performance or other expectations. The opinions, estimates and analyses reflect our current judgment, which may change in the future.

All opinions, estimates and forecasts contained herein are based on information available to Hamilton Lane as of the date of this presentation and are subject to change. The information included in this presentation has not been reviewed or audited by independent public accountants. Certain information included herein has been obtained from sources that Hamilton Lane believes to be reliable but the accuracy of such information cannot
be guaranteed.

This presentation is not an offer to sell, or a solicitation of any offer to buy, any security or to enter into any agreement with Hamilton Lane or any of  its affiliates. Any such offering will be made only at your request. We do not intend that any public offering will be made by us at any time with respect to any potential transaction discussed in this presentation. Any offering or potential transaction will be made pursuant to separate documentation negotiated between us, which will supersede entirely the information contained herein.

The information herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice, or investment recommendations. You should consult your accounting, legal, tax or other advisors about the matters discussed herein.

Hamilton Lane (UK) Limited is a wholly-owned subsidiary of Hamilton Lane Advisors, L.L.C. Hamilton Lane (UK) Limited is authorized and regulated by the Financial Conducts Authority. In the UK this communication is directed solely at persons who would be classified as a professional client or eligible counterparty under the FCA Handbook of Rules and Guidance. Its contents are not directed at, may not be suitable for and should not be relied upon by retail clients.

Hamilton Lane Advisors, L.L.C. is exempt from the requirement to hold an Australian financial services license under the Corporations Act 2001 in respect of the financial services by operation of ASIC Class Order 03/1100: U.S. SEC regulated financial service providers. Hamilton Lane Advisors, L.L.C. is regulated by the SEC under U.S. laws, which differ from Australian laws. The PDS and target market determination for the Hamilton Lane Global Private assets Fund (AUD) can be obtained by calling 02 9293 7950 or visiting our website www.hamiltonlane.com.au.

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As of February 28, 2023

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