Stats › Active, passive and flows › Private equity
Private equity against public equity
Private equity funds buy whole companies, keep them off the stock market for a few years, then try to sell them for more. The question everyone wants answered is simple enough: does that beat just owning the index? The answer isn't simple at all, and the reason it isn't is the most useful thing on this page.
Two funds can look at the same decade and honestly report different results, because private equity performance is quoted as an internal rate of return and index performance is quoted as a time weighted return, and those are different statistics that can't sit side by side. On top of that, a company that hasn't been sold yet is valued by the manager who owns it. So this page walks through the measurement problem first, then lays out the evidence in three parts: the academic case that buyouts beat the market, the academic case that they've merely matched it since 2006, and what the last few years actually look like. Then there's the part I think matters most right now, which is the 32,000 companies sitting unsold with $3.8 trillion of value attached to them.
Five sources here and they disagree with each other, sometimes by a factor of two on the same headline number. I've kept the disagreements in view rather than choosing a winner, and the notes explain where a figure I'd have liked to include was left out because it wouldn't survive a consistency check. If you only read one part, read the notes.
The honest answer is that it depends on the window and the measure, and that the measurement problem is the story. Cambridge Associates' US private equity index returned 15.17% a year over ten years and 8.67% over one year to December 2025. McKinsey reports buyout funds underperformed US and global public equities for the third consecutive year in 2025, at about 7% against the S&P 500's 18%. The academic record splits the same way: Harris, Jenkinson and Kaplan found buyout funds beat the S&P 500 by more than 3% a year for most vintages up to 2012, while Phalippou found private equity has merely matched public markets since 2006. Meanwhile 32,000 companies worth $3.8 trillion sit unsold.
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