Warburg Pincus and Venture Economics launched an index to track performance of venture-backed public stocks.
Called the Warburg Pincus/Venture Economics Post-Venture Capital Index, the benchmark monitors the performance of 1,200 companies that received venture or buy-out financing prior to, or following, a public equity offering.
The asset class has generated substantially higher returns than the Russell 2000 Growth index and the Standard & Poor's 500, based on back-testing over one-, three-, five- and 10-year periods.
For example, in the five-year period ended Sept. 30, 1996, the PVCI achieved an annualized return of 19.7%, vs. 12.6% for the Russell 2000 Growth index and 12.1% for the S&P 500.
Warburg Pincus, New York, also runs a mutual fund and some institutional portfolios using the post-venture capital strategy.
Jesse Reyes, director of Venture Economics, Boston, said the number of post-venture capital companies has been dramatic since 1986 - the inception date of the index data - and not only in the high-technology sector.
The new index is designed so companies remain in the index for 10 years from the date of first inclusion or until price data no longer is available, for example because a company is merged into or acquired by another company.
