US private equity and venture capital funds produced modest returns during third quarter 2014, though both outpaced the S&P 500 and Russell 2000® indexes, as indicated by the Cambridge Associates LLC benchmark indexes of the two alternative asset classes. Over the first nine months of the year, venture capital slightly outperformed private equity and in the public markets, large-cap equity bested small cap. Over various sub-periods within the past ten years, private equity and venture capital indexes have had mixed results against the public markets, but over the longer term they have handily beaten the public markets.
The third quarter return of 1.7% for the private equity index was substantially lower than its 5.7% performance in the previous quarter while the 2.4% return for the venture capital index was only 0.6% lower than its previous quarter’s results. The private equity benchmark has earned positive returns in nine straight quarters while the venture capital index has produced positive results in 12 straight. Public equities struggled in the third quarter but the IPO market remained healthy, and the latter benefitted the venture industry.