March 2013

Private Equity and Venture Capital Investments in Ex U.S. Developed and Emerging Markets Posted Positive Returns in Q3 2012, Bouncing Back from a Negative Second Quarter

BOSTON (March 19, 2013) – Private equity and venture capital funds that invest primarily in companies located outside the U.S., in both developed and emerging markets, generated positive returns during the quarter ending September 30, 2012.  While trailing the performance of international public equity indices during the period, both alternative asset groups improved significantly from negative results in the second quarter, according to global institutional investment advisor Cambridge Associates LLC (CA).

The Cambridge Associates LLC Global ex U.S. Developed Markets Private Equity and Venture Capital Index earned 3.1% in the third quarter, up 4.6% over the prior quarter.  For the first three quarters of 2012, the index was up 9.1%.  The Cambridge Associates LLC Emerging Markets Private Equity and Venture Capital Index rose 2.6% in the third period, a 5.3% quarter-over-quarter improvement; year to date, the index earned 6.2%.  Returns for both the developed and emerging markets indices are  calculated in U.S. dollars.

The following table shows the performance of both CA benchmarks versus comparable public market indices over a variety of time horizons ending on September 30, 2012.

Global ex U.S. Developed and Emerging Markets Private Equity and Venture Capital Indices 
Returns (%) in U.S. Dollars
Periods ending September 30, 2012

For the periods ending

September 30, 2012


Year to


1 Year

3 Years

5 Years

10 Years

15 Years

20 Years

Ex U.S. Developed Markets

PE and VC









Emerging Markets 

PE and VC









Other Indices










MSCI Emerging Markets









Sources:  Cambridge Associates LLC, MSCI Inc., and Thomson Reuters Datastream. MSCI data provided “as is” without any express or implied warranties. Returns for time periods shorter than a year are not annualized.

Both the developed and the emerging markets indices outperformed their public equity counterparts, the MSCI EAFE and the MSCI Emerging Markets indices, over the longest investment periods in the table, the 15- and 20-year marks.

The Five Largest Vintages in the Developed Markets Index, and the Four Largest in the Emerging Markets Index, all had Positive Returns for the Quarter

Funds launched in 2008 were the best performers of the five significantly-sized vintages (i.e. those accounting for at least 5% of the index’s value) in the developed markets index, earning 6.4% for the third quarter.  All five (vintage years 2004 – 2008) rose during the quarter.  The largest vintage in the index, the group of funds launched in 2006 and representing 29.4% of the index’s value, returned 2.3%, the lowest of the top five.

In the emerging markets index, only four vintages were significantly sized, but all four earned positive returns for the period – a complete reversal from the previous quarter, when all posted negative returns.  Of the four, the 2006 and 2007 vintages each gained 3.5%, while the 2005 and 2008 vintages each earned 2.3%.  The 2007 vintage remained the largest in the index and represented 36.7% of its total value.

Capital Calls and Distributions Rose in the Developed Markets Index; in the Emerging Markets Index, Distributions also Increased, but Contributions Fell

Fund managers in the developed markets index summoned more cash from their investors during the third quarter than in the second – about $7.9 billion, a 29.4% increase.  Nearly 67% of the total capital called during the quarter came from investors in three vintage years: 2007, 2008, and 2011.  Fund managers also increased distributions, to $14.7 billion.  This was a 65.0% jump over the prior period and marked the sixth time in the last seven quarters in which distributions outpaced contributions.  About 75% of the distributions during the quarter went to the limited partners of funds raised in 2005, 2006, and 2007.

Contributions in the emerging markets index during the third quarter fell 5.7%, to $3.8 billion.    Almost 83% of this amount came from four vintages: 2007, 2011, 2010, and 2006.  Investors in funds in the emerging markets index saw a 91.7% increase in distributions in the third quarter, to $2.1 billion, though this followed a second period in which distributions were at their lowest quarterly level in three years.  Vintage years 2005 and 2007 together accounted for 60% of all distributions during the quarter.

“Fund managers in both indices gave us the biggest jump in distributions that we’ve seen in some time,” said Miriam Schmitter, Managing Director.  “In each case, the bulk of the distributions were driven by a small number of vintages – the 2005 through 2007 vintage year funds in the developed markets index and the 2005 and 2007 vintages in the emerging markets index. The exit environment in Europe has been healthy, supported by recovering debt markets.”

Healthcare was the Top Earning Large Sector in the Developed Markets Index, while Financial Services Led the Way among the Largest Sectors in the Emerging Markets Index

Healthcare companies in the developed markets index generated a 5.1% return for the third quarter, which was the best of the seven significantly-sized sectors.  Of the seven, only one sector, media, had a negative result for the quarter, and it fell only 0.1%.  During the quarter, consumer and healthcare companies attracted the first and second largest amounts of investment capital, a combined 43% of the total.

All five of the significantly-sized sectors in the emerging markets index had positive returns for the quarter.  Financial services topped the list with a 6.2% return, followed by a 4.2% return for healthcare.  Manufacturing was the poorest performing large sector, rising 1.6%.  Companies in the consumer sector, which represented almost a quarter (23.9%) of the index’s value, received 37% of the total invested capital during the quarter, the largest of any individual sector in the index and the fourth consecutive quarter in which consumer companies were the leading recipients of investment dollars.

Companies in the U.S. were the Best Performers among the Largest Regions in the Developed Markets Index, though Companies in Japan Led overall

The U.K. remained the largest regional component of the developed markets index during the third quarter, representing 13.9% of the index’s value; companies in the U.K. returned 3.6% for the period.  The U.S. was the performance leader among the five largest regions by investment value in the index, returning 4.5%.  The other three top regions were Sweden and Germany, each of which returned 3.5%, and France, which rose 1.7%.  Companies in Japan, however, were the top performers in the index overall, earning 15.9%.

In the emerging markets index, only three regions represented more than 5.0% of the index: Mainland China, India, and South Korea.  China was the single largest region in the index, accounting for 35.6% of its value, and it turned in a negative performance for the quarter, falling 1.4%.  India represented 10.7% of the index and had by far the best quarter of the top three regions, earning 9.0% for the quarter.  South Korean companies generated a 2.0% return and represented 5.6% of the index.

Western Europe and Emerging Asia Continued to Attract the Bulk of Investment Capital

Fund managers in the developed markets index ploughed more than 63% of their investment dollars into companies located in Western Europe, which, while following a long-established trend, was 15% less than the historical average.  Companies in the U.S. and Australia attracted the second and third largest amounts of investment capital, respectively, in the index.

Companies located in emerging Asia were the biggest beneficiaries of investment capital in the emerging markets index, collecting 76% of the total for the quarter.

About the Indices

Cambridge Associates derives its Global ex U.S. Developed Markets Private Equity and Venture Capital benchmark from the financial information contained in its proprietary database of global ex U.S. and emerging markets private equity and venture capital funds. As of September 30, 2012, the database comprised 694 funds formed from 1986 to 2012 with a value of about $251 billion. By way of comparison, ten years ago at September 30, 2002, the benchmark index included 318 funds whose value was roughly $39 billion.

Cambridge Associates derives its Emerging Markets Private Equity and Venture Capital benchmark from the financial information contained in its proprietary database of emerging markets venture capital and private equity funds. As of September 30, 2012, the database comprised 417 funds formed from 1986 to 2012 with a value of roughly $98 billion. By way of comparison, as of September 30, 2002, the benchmark index included 150 funds whose value was about $13 billion.

The pooled returns represent the net end-to-end rates of return calculated on the aggregate of all cash flows and market values as reported to Cambridge Associates by the funds’ general partners in their quarterly and annual audited financial reports.  These returns are net of management fees, expenses, and performance fees that take the form of a carried interest.

About Cambridge Associates

Founded in 1973, Cambridge Associates is a provider of independent investment advice and research to institutional investors and private clients worldwide. Today the firm serves over 900 global investors and delivers a range of services, including investment consulting, outsourced investment solutions, research and tools (Research Navigatorsm and Benchmark Calculator), and performance monitoring, across asset classes. The firm compiles the performance results for more than 5,000 private partnerships and their more than 65,000 portfolio company investments to publish proprietary private investments.  Cambridge Associates has more than

1,000 employees serving its client base globally and maintains offices in Arlington, VA; Boston; Dallas; Menlo Park, CA; London; Singapore; Sydney; and Beijing. Cambridge Associates consists of five global investment consulting affiliates that are all under common ownership and control. For more information about Cambridge Associates, please visit

Cambridge Associates has been selected to provide data and to develop and maintain customized industry benchmarks for a number of prominent industry associations, including the Institutional Limited Partners Association (ILPA), Australian Private Equity & Venture Capital Association Limited (AVCAL); the African Venture Capital Association (AVCA); the Hong Kong Venture Capital and Private Equity Association (HKVCA); the Indian Private Equity and Venture Capital Association (IVCA); the New Zealand Private Equity & Venture Capital Association Inc.

(NZVCA); the Asia Pacific Real Estate Association (APREA); and the National Venture Capital Association (NVCA). Cambridge also provides data and analysis to the Emerging Markets Private Equity Association (EMPEA).

Media Contact

Frank Lentini
Sommerfield Communications, Inc.