Private equity has outperformed both the UK stock market and average pension fund returns over the past 20 years, according to a report from the BVCA trade body. But investors say private equity’s strong record looks unsustainable and short-term performance is likely to suffer from a slowing economy and the credit squeeze. Mark Drugan of Capital Dynamics, the private equity investor and co-author, said: “It is fair to say that 2008 will not be as strong as 2007 but this…actually may be a good year to invest.” An investor who put money in every UK-based private equity firm created since 1996 would have had 18.9% annual returns net of costs and fees. Private equity returns over 10 years were 20.1%, beating the 6.2% of the FTSE All-Share Index and 7.1% of average pension fund returns.
