European buyouts outperforming public equity

European buyouts outperforming public equity

Investors who have been in private equity for a long time have seen excellent returns. The key to success lies in investing steadily and for the long term. Looking at historic returns reveals that for example European buyouts outperformed the DAX in 12 of the last 15 years. The high private equity returns between 1998 and 2000 and between 2004 and 2007 came mainly from funds launched about five years earlier. Conversely, investors who climbed on board the asset class in the boom years of 1999 or 2005 got off to a bad start. These investors were seduced into excessive expectations by the very good results seen earlier as they can occur in individual calendar years, but look unrealistic for a diversified portfolio over the long term. Regardless of all the ups and downs, investors assume that steadily building up and holding a private equity portfolio over the long term can generate an excess return over public equity.