April 2014

Private Equity Investments in ex U.S. Developed and Emerging Markets Posted Solid Q3 Returns and Improved Significantly over Their Q2 Performance

Both Alternative Asset Classes Lagged Comparable Public Market Indices for the Quarter

BOSTON, MA (April 8, 2014) – Private equity funds that invest primarily in developed ex U.S. markets, and those that focus on emerging markets, started the second half of 2013 with solid returns in the third period. Both alternative asset classes generated positive returns for the quarter ending September 30, 2013, with investments in developed markets outperforming those in emerging markets for the period. Returns for funds in both asset classes were up from the prior quarter, according to global institutional investment firm Cambridge Associates LLC (CA).

The Cambridge Associates LLC Global ex U.S. Developed Markets Private Equity and Venture Capital Index rose 6.7% in the third quarter, up from a return of 2.4% in the prior period.  The index’s return, which is measured in U.S. dollars, was aided by a strengthening Euro during the July to September period.  The global index was outperformed by its public market counterpart, the MSCI EAFE, which earned 11.6% in the third quarter.  The Cambridge Associates LLC Emerging Markets Private Equity and Venture Capital Index improved from a negative 0.4% return in the second quarter to a 3.7% return in the third.  Its public market counterpart, the MSCI Emerging Markets, earned 5.9%.


Global ex U.S. Developed and Emerging Markets Private Equity and Venture Capital Indices

Returns (%) in U.S. Dollars

Periods ending September 30, 2013


For the periods ending
September 30, 2013


Year To Date













Ex-U.S. Developed Markets PE and VC









Emerging Markets

PE and VC









Public Market Indices










MSCI Emerging Markets









S&P 500










Sources:  Cambridge Associates LLC, MSCI Inc., Standard & Poor’s, and Thomson Reuters Datastream. MSCI data provided “as is” without any express or implied warranties.


Q3 Highlights from the CA ex U.S. Global Developed Markets Index

The third period was the global developed markets index’s fifth consecutive positive quarter.  During the period, all four vintage years representing at least 5% of the index (“significantly sized”) – vintages 2005 through 2008 – earned positive returns.  Helped by more than $2.7 billion in write-ups in the consumer and IT sectors, funds raised in 2008 led the group with a return of 7.8%.  Funds raised in 2005 had the lowest return, 4.8%.  The 2006 vintage, the largest in the index, rose 7.6%.  Together, the four largest vintages accounted for almost 77% of the index during the quarter.

Total Contributions for the First Three Quarters the Lowest in Five Years
Fund managers in the global developed markets index increased capital calls and distributions for the period, though the former rose only slightly, to $6.9 billion.  About 48% of the calls came from fund managers of the 2007 and 2012 funds.  Capital calls over the first nine months of 2013 were the lowest of any three-quarter period since the same period in 2009.

Distributions for the quarter rose more than 19% over the prior period to $15.2 billion.  Of this amount, just over one-third of the distributions, about $5.1 billion, went to limited partners in the 2005 vintage year funds.

“With a ratio of over 2:1 in terms of distributions to capital called, managers appear to be taking advantage of favorable selling conditions and conversely conserving their capital in the current environment.  The continued positive return momentum over the last five quarters is welcomed by Limited Partners,” Andrea Auerbach, Managing Director and head of global private equity research at Cambridge Associates.

All of the Largest Sectors in the Index Generated Positive Returns
Seven sectors in the developed markets index during the quarter were significantly sized; all of them finished the period in positive territory.  Returns among the seven ranged from a high of 11.7% for IT to a low of 4.7% for financial services companies.  The four largest sectors – consumer, health care, IT, and financial services – represented about 60% of the index’s value at the end of the quarter.

Almost one-fourth of the capital invested during the quarter went to consumer companies.  This was the largest among the sectors in the index and about 3% less than the consumer sector’s long-term average.

Returns from Investments in Sweden Topped the List of the Largest Regions
Five regions in the developed markets index represented about 62.3% of the index’s value during the quarter: France, Germany, Sweden, the U.K., and the U.S.  Companies headquartered in Sweden returned 7.5%, the best of the five.  By far the largest region, companies in the U.K. represented almost a quarter of the index and earned a 7.0% return for the period.  Germany, the third largest region, returned 3.8%, the lowest among the five largest regions.

Although the developed markets index tracks private equity investments in developed markets worldwide, companies based in Europe continue to attract the bulk of investment capital: 76% of the capital invested during the quarter went to European-based companies.

Q3 Highlights from the CA ex U.S. Emerging Markets Index

As in the developed markets index, all of the significantly-sized vintage years in the emerging markets index had positive third quarters.  The five largest vintages – 2005 through 2008, and 2010 – represented nearly 83% of the benchmark’s value during the quarter.  The largest single vintage year in the index, 2007, accounted for just over 35% of the index’s value and returned 3.5% for the period.  Funds raised in 2008 earned 7.7%, which was the best of the five, while funds raised in 2005 posted a 2.1% return, which was the lowest of the group.

Distributions Fell Sharply During the Quarter
Fund managers in the emerging markets index called $3.8 billion from their limited partners in the third quarter, which was roughly equal to the amount called in the prior period.  Three vintages – 2007, 2010, and 2011 – accounted for 71% of the capital called during the quarter

While capital calls were essentially flat versus the prior quarter, distributions dropped 48%, making the third quarter the first period in 2013 in which capital calls outweighed capital distributions.  Roughly 44% of the distributions during the quarter went to the 2007 vintage year funds’ limited partners, the most of any vintage.

Four of the Five Largest Sectors Posted Positive Q3 Returns
Five sectors in the emerging markets index were significantly sized: consumer, financial services, health care, IT, and manufacturing.  Of the five, only IT delivered a negative return for the third quarter.  Health care was the top performer, earning 7.2%.  Consumer companies, always the largest sector in the index, returned 5.4% in the period.

Together, companies in three sectors received almost 53% of the total capital invested during the quarter: consumer, energy, and construction.

Companies in China Performed the Best of the Major Geographic Regions
Only three regions represented more than 4% of the emerging markets index by market value: India, Mainland China, and South Korea.  China had the top return of the three, 6.9%.  Because China was the largest component of the index, representing more than 35% of its value, companies in China had the largest impact on the benchmark’s performance for the period.  South Korean companies generated a 4.7% return, while returns for Indian companies were essentially flat for the quarter.

For more detailed information please see the Cambridge Associates commentary on the Q2 benchmarks.

About the Indices

Cambridge Associates derives its Global ex U.S. Developed Markets Private Equity and Venture Capital Index from the financial information contained in its proprietary database of global ex U.S. private equity and venture capital funds. As of June 30, 2013, the database included 721 global ex U.S. developed markets private equity and venture capital funds formed from 1986 to 2013 with a value of about $265 billion.  Ten years ago, as of June 30, 2003, the benchmark index included 337 global ex-US developed markets funds, whose value was roughly $51 billion.

Cambridge Associates derives its Emerging Markets Private Equity and Venture Capital benchmark from the financial information contained in its proprietary database of global ex U.S. private equity and venture capital funds.  As of June 30, 2013, the database comprised 445 emerging markets funds formed from 1986 to 2013 with a value of about $105 billion.  Ten years ago, as of June 30, 2003, the benchmark index included 158 emerging markets funds, whose value was slightly less than $13 billion.

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 950 global investors and delivers a range of services, including investment advisory, outsourced investment solutions, research and tools (Research Navigator and Benchmark Calculator), and performance monitoring, across asset classes. The firm compiles the performance results for over 5,400 private partnerships and their more than 68,000 portfolio company investments to publish proprietary private investments benchmarks.  Cambridge Associates has more than 1,100 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).