The State Street Global Exchange Private Equity Index Revealed Decreased 0.96 Percent Return in Q4 2018

Friday, June 28, 2019 4:34 pm EDT

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BOSTON

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NYSE:
STT

June 28, 2019- BOSTON- The State Street Global Exchange®  Private Equity Index (GXPEI) ended the fourth quarter of 2018 with a decrease of 0.96 percent, representing the Index’s first decline in three years. Buyout funds fell 1.29 percent in the quarter, followed by a 0.94 percent loss for Private Debt funds, while Venture Capital funds were treading water and generating a 0.13 percent quarterly return.

Despite the volatility in the fourth quarter, GXPEI still achieved 9.90 percent growth throughout 2018 on aggregate. Venture Capital funds lead the crowd with a 16.23 percent annual return, followed by Buyout funds at 9.09 percent and Private Debt funds at 4.27 percent.

The PEI is based on directly-sourced limited partnership data and represents around $2.8 trillion in private equity investments, with more than 2,900 unique private equity partnerships, as of December 31, 2018.  

“As expected, 2018 set the highest post crisis fund raising records with more than  $280 billion raised through primary PE funds in GXPEI,” said Anthony Catino, managing director, Alternative Investment Solutions for State Street. “Overall, private equity fund raising activity in 2018 increased 42 percent compared to 2017. Venture Capital, in particular, saw an 80 percent increase in capital raised.”

“Despite the lower returns in the fourth quarter, private equity investments declined less than their public counterparts. Throughout 2018, Private Equity outperformed the S&P 500 by 12 percent, while Venture Capital outperformed the NASDAQ by 17 percent” said Will Kinlaw, senior managing director and global head of State Street Associates®, a division of State Street Global Exchange. “On the other hand, our data indicates that the multi-year trend of positive net cash flow returned to the limited partners looks to have diminished."

Fourth Quarter Highlights Include:

 

  • The Q4 return represents the first decline of the index in more than three years, falling from 3.03% in Q3 2018 to -0.96% in Q4 2018. However, private equity still outperformed the US equity market (proxied by S&P 500) and US small-cap market (proxied by Russell 2000), which posted returns of -13.52% and -20.2%, respectively, for the quarter.

  • Venture Capital funds performed best among the three main private equity strategies (Venture Capital, Buyout and Private Debt) for the fourth quarter in a row, but the 0.13% quarterly return was the lowest for Venture Capital funds since Q1 2016.

    • Both Buyout and Private Debt saw a negative quarterly return; Private Debt returned -0.94% compared to 1.34% in Q3; Buyout funds returned -1.29%, down from 2.84% in Q3.

  • European-focused funds outperformed other regions and recorded a positive return.

    • European-focused private equity funds experienced a 0.47% quarterly gain in USD denominated terms, down from 0.98% in the previous quarter.

    • US focused PE funds returned -1.1% for Q4 2018, down from 3.69% in the previous quarter.

  • Among sectors, Information Technology funds led for the fourth straight quarter with a 1.31% quarterly return, the only sector seeing a positive return.

    • Industrials funds followed with a -0.32% quarterly return, down from 2.0% in the previous quarter, and Financials funds with a -0.33% quarterly return, down from 3.55% last quarter. Energy funds experienced the biggest drop among sectors with a -7.04% return, down from 3.94% in Q3.

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

 

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

 

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.

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 $32.6 trillion in assets under custody and administration and $2.8 trillion* in assets under management as of March 31, 2019, State Street operates globally in more than 100 geographic markets and employs approximately 40,000 worldwide. For more information, visit State Street's website at www.statestreet.com.

* Assets under management include the assets of the SPDR® Gold ETF and the SPDR® Long Dollar Gold Trust ETF (approximately $33 billion as of March 31, 2019), for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) serves as marketing agent; SSGA FD and State Street Global Advisors are affiliated.

 

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