PE 3 Percent Alpha Is Investor Breakeven Point: Study

Private equity (PE) is off many investors’ radar even though it has a reputation for outperforming equities markets. With high fees, a long investment horizon, and an opaque structure many people simply aren’t interested. A recent paper from the National Bureau of Economic Research tried to quantify these effects and determine just how much alpha PE has to generate to be a better deal than investing in other assets.

Average return of private equity funds

“While it is generally accepted that the average return of private equity (PE) funds exceeds the...