State Street Global Exchange Private Equity Index Reports Highest Quarterly Return in Two Years

Performance Driven in Part by Tech Sector Returns, Which Surpassed Dot-Com Era Highs

Wednesday, August 2, 2017 11:38 am EDT

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"As of Q1 2017, we saw some early signs of a trend reversal as the total dry powder, which dropped from a peak of $488 billion in May 2016 to $461 billion in March 2017."

August 2, 2017 — The State Street Global Exchange Private Equity Index (GXPEI) continued its gains going into 2017, rising 3.95 percent in the first quarter representing the highest quarterly return in two years. The increase was driven by the strong performance of Buyout Funds and Private Debt, along with a significant improvement in Venture Capital.

Overall the index has continued to see positive net cash flows to investors in Q1 going into Q2 with contributions remaining steady and low while distributions have increased slightly as compared to the same period of 2016.

The GXPEI is based on directly sourced limited partnership data and represents more than $2.5 trillion in private equity investments, with more than 2,700 unique private equity partnerships, as of March 31 2017.

“We saw some pick up in Venture Capital performance in the first quarter of 2017, driven largely by higher returns in the Information Technology sector, which comprises close to 40 percent of Venture Capital funds overall in the State Street dataset,” said Will Kinlaw, senior managing director and global head of State Street Associates, a division of State Street Global Exchange. “As the S&P technology sector index recently surpassed its dot-com era high, it is not surprising that venture capitalists are gaining more confidence in technology startups.”

Additional First Quarter GXPEI Highlights Include:
Segment results:
• The Buyout Funds segment posted a 4.23% gain in Q1, continuing its outperformance of the other two main strategies for five consecutive quarters
• Venture Capital funds rebounded with a 3.5% gain, compared to the relatively flat performance of 0.47% in Q4 2016
• Private Debt funds maintained a steady pace with a 3.1% gain

Regional results:
• Among all three regions, European-focused private equity funds experienced the strongest performance, with a 4.09% increase in USD-denominated terms, partly driven by a weaker dollar during the quarter.
• US-focused funds returned 3.93% (2.64% in Q4 2016), while funds focused on the rest of the world gained 3.89% (2.78% in Q4 2016)

Sector results:
• Among all sectors covered, Information-Technology-focused funds saw the highest return, with a 5.43% gain (2.53% in Q4 2016) followed by Industrials-focused funds with a return of 4.46% (8.68% in Q4 2016); Energy-focused funds posted a narrow gain of 1.27%, down from 7.02% in Q4 2016

“Over the past few years, the dry powder has been steadily increasing as a result of strong inflows from the limited partners and cautious capital calls by the general partners,” said Anthony Catino, managing director, Alternative Investment Solutions for State Street. “As of Q1 2017, we saw some early signs of a trend reversal as the total dry powder, which dropped from a peak of $488 billion in May 2016 to $461 billion in March 2017.”

For additional insights, or to learn more about the GX Private Equity Index please visit http://www.ssgx.com/peindex.  

About State Street Corporation
State Street Corporation (NYSE: STT) is one of the world's leading providers of financial services to institutional investors, including investment servicing, investment management and investment research and trading. With $31.0 trillion in assets under custody and administration and $2.60 trillion* in assets under management as of June 30, 2017, State Street operates in more than 100 geographic markets worldwide, including the US, Canada, Europe, the Middle East and Asia. For more information, visit State Street’s website at http://www.statestreet.com.

* AUM reflects approx. $34 billion (as of June 30, 2017) with respect to which State Street Global Advisors Funds Distributors, LLC serves as marketing agent; SSGA FD and State Street Global Advisors are affiliated.


Important Information

Investing involves risk including the risk of loss of principal.

Past performance is no guarantee of future results. It is not possible to invest directly in an index. Index performance does not reflect charges and expenses associated with the fund or brokerage commissions associated with buying and selling a fund. Index performance is not meant to represent that of any particular fund.

Index returns reflect capital gains and losses, income, and the reinvestment of dividends.

The information provided does not constitute investment advice and it should not be relied on as such.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for decisions based on such information and it should not be relied on as such.

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Contact:

Julie Kane
+1 617 664 3001
jekane@statestreet.com
@StateStreet

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