Discussing highlights from a recent Cambridge Associates’ research paper, A New Arrow in the Quiver: Investment-Level Benchmarks for Private Investment Performance Measurement, senior investment director Rich Carson explains how investment-level benchmarks can be complementary to the traditional fund-level benchmarks in understanding “the full story of how managers create value.”

The new fund-level benchmarks can add greater insight for investors, as private equity increasingly involves a variety of fund structures deviating from the traditional 2/20 fee model. Today, the private equity industry comprises co-investments, direct investments, sector-specific funds, secondaries-dedicated funds and even varied fee options – such as one-and-30 or three-and-20 instead of two-and-20 – in the traditional commingled structures. These complications, Carson said, make the fund-level benchmark less of a reliably direct comparison.

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