What is considered a good return for an entire fund?
(Chimp, 9
Points)
on 8/21/11 at 10:24am
What is a good net annual return for a mature PE fund? Has this changed a lot over the last couple years?
Just curious as I compare across firms. Have a few interviews and both firms are pointing to their fund performance which differ vastly.






Funds are usually compared
Funds are usually compared across vintage (the year the fund closed) within a certain strategy/market segment (ie a buyout fund raised in 2006 wouldn't be compared to a VC fund from 2005, and mid-market buyouts aren't directly analogous to large-cap) because there's a lot of beta/market cycle issues.
There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.
As Kenny says you can compare
As Kenny says you can compare Funds by vintage and by strategy (as an aside I consider a Fund's vintage to be the year that it made its first investment, not the year Fundraising closed as these will often be different).
In general - anything above 2x MOIC on a net basis is pretty good, anything above 3x is excellent. In VC you have non-binary returns and therefore will sometimes get 18x and more often 1.4x (fyi a 2.15x multiple is a 8% annualised return for a Fund over the whole life of a Fund (I'm assuming a 10 year life)) obviously the j-curve means that your performance is likely to be flat-to-slightly negative in the first couple of years with returns increasing significantly when the Fund is in its harvest period, with 20-35% net irr later in the Fund's life no uncommon.