Greg Miller, spokesman for Thomas H. Lee, took issue with some of the rankings. One of the buyout funds in the second quartile is the firm's first institutional fund, Thomas H. Lee I. It had a net internal rate of return of 54% from its inception in 1989 through Dec. 31, 2003, Mr. Miller said.
"This return should have placed it in the top quartile," Mr. Miller said. Also, Fund V, a vintage 2000 fund in the second quartile, is less than 50% invested, he said. Third-quartile ranked Thomas H. Lee Putnam Internet Partners, a vintage 2000 venture invested jointly with Putnam Investments, Boston, is a little over 50% invested, he said.
-- None of the seven funds from Morgan Stanley, New York, made it to the top quartile.
-- Of Boston-based HarbourVest Partners LLC's 21 funds, only HarbourVest Private Equity Partners IV, a European buyout fund of funds, is in the top quartile. Two others are in the second quartile; five in the bottom; and the remainder in the third quartile. HarbourVest officials declined to comment for the record.
- Only two of Menlo Park-based Mayfield's eight venture funds tracked by the survey are in the top quartile. One is in the bottom; the rest are in the second and third quartiles.
There's good news, too.
Among the 60 consistently top-performing general partners are Madison Dearborn Capital Partners LLC, Chicago; TA Associates, Boston; Permira Advisers Ltd., London; and New Enterprise Associates, Baltimore.
Most of the 11 venture funds of Sequoia Capital, Menlo Park, which has been fighting to keep its performance information secret, are in the top quartile. Exceptions are its 2000 and 2001 funds, which are in the bottom quartile, and a mezzanine fund that's in the third quartile.
Private Equity Intelligence gathered data on 1,722 funds of funds and private equity, venture capital, mezzanine and buyout funds worth about $820 billion. The information was obtained largely through Freedom of Information Act requests to pension funds, endowments and foundations. The firm also got information from the general partners after completing the FOIA work.
Performance data covered 1990 through 2003. In some cases, performance information could be skewed because a single offering tracked by Private Equity Intelligence could have mixed and matched buyout and venture, domestic and European, and older and newer funds. In these cases, the internal rate of return may not tell the entire story, noted one fund of funds manager, who declined to be identified.
In general, those firms with the longest track records tended to have better performing funds, said Mark O'Hare, managing director of Private Equity Intelligence.
Mr. O'Hare's research shows fund performance has been on a downward slope since 1993, even among those funds in top quartile.
For example, the average internal rate of return for funds in the top quartile was close to 40% in 1993; by 2000, that number had dropped to -5%.
He also found that top-quartile funds have yielded individual rates of returns of more than 30%, while bottom-quartile have not provided yields of much more than 10%, even in the best of times.
"We compared like with like. If you happen to be a venture fund in the glory years of early to mid-1990s vintage, maturing in the late 1990s, you would have all of your Christmases at once with tremendous returns," Mr. O'Hare said. "Those are the very funds that have suffered in recent years."