How to Benchmark Private Equity Performance
Quartile rankings, vintage year comparisons, and PME analysis using LP Data's benchmark dataset of 7,000+ funds.
Why Benchmarking PE Is Different
PE funds lack daily pricing. Returns depend on when you invested, what you invested in, and when exits occurred. A 15% IRR in 2007 meant something different than 15% in 2009.
LP Data's benchmark dataset includes 7,098 funds with performance data disclosed by public pension funds. Unlike self-reported databases, these are audited figures from institutional LPs.
Quartile Rankings by Vintage Year
The standard approach: compare a fund to peers from the same vintage year.
LP Data Quartile Cutoffs (All Strategies):
| Vintage | Funds | Q1 IRR | Median IRR | Q3 IRR | Spread |
|---|---|---|---|---|---|
| 2019 | 417 | 18.5% | 13.0% | 8.2% | 10.3pp |
| 2018 | 378 | 19.1% | 13.8% | 8.3% | 10.8pp |
| 2017 | 291 | 19.7% | 13.7% | 8.9% | 10.8pp |
| 2016 | 289 | 18.9% | 13.8% | 8.1% | 10.8pp |
| 2008 | 270 | 16.4% | 10.7% | 4.6% | 11.8pp |
| 2007 | 306 | 12.7% | 7.4% | 2.5% | 10.2pp |
Reading the table: A 2018 fund with 15% IRR is second quartile (above 13.8% median, below 19.1% Q1). A 2007 fund with 15% IRR is top quartile—only 25% of that vintage exceeded 12.7%.
The 2007-2008 spread shows crisis-era dispersion: the difference between getting your money back and losing it.
Public Market Equivalent (PME)
PME asks: would the same cash flows invested in public equities have performed better?
Methodology:
PME benchmarks by era:
| Period | S&P 500 CAGR | PE Median IRR | PE Premium |
|---|---|---|---|
| 2009-2019 | 13.5% | 13.2% | -0.3pp |
| 2015-2019 | 11.7% | 13.5% | +1.8pp |
| 2020-2023 | 8.2% | 10.5% | +2.3pp |
Key finding: PE consistently generates ~200-300 basis points above public markets, but not the 500bp+ often marketed. After fees and illiquidity, the premium is marginal for median funds.
Top quartile funds justify the illiquidity. Bottom quartile funds do not.
Benchmarking Pitfalls
1. Cross-vintage comparison
A 2022 fund with 1.2x TVPI is not comparable to a 2015 fund with 1.6x TVPI. The 2015 fund has had 7 more years to compound and exit.
2. Ignoring strategy
LP Data tracks funds across private equity, private credit, real assets, and opportunistic strategies. Credit funds have lower IRR (8-12%) but higher current yield. Comparing credit to buyout on IRR alone is misleading.
3. GP valuation discretion
Through Q3 2022, many GPs had not marked down portfolios despite public market declines of 20%+. Q4 2022 and 2023 brought delayed write-downs. Treat recent NAV-based metrics with skepticism.
4. Survivorship bias
Pension disclosures partially mitigate this—pensions report all holdings, including underperformers. Self-reported databases skew positive because struggling GPs stop submitting data.
5. Fee structures
A fund reporting 15% gross IRR may deliver 11-12% net after 2% management fee and 20% carry. Always benchmark net returns.