Private equity funds had a net internal rate of return of 18.8% in 2010, according to a report by Preqin, a London-based data provider.
For the year, buyout funds had a net IRR of 22.6%; venture capital, 10.9%; mezzanine funds, 8.6%; and real estate, 4.7%.
Preqin also analyzed the difference in performance between top-quartile and bottom-quartile private equity funds raised from 1998 to 2008 and found that the spread was wide. For example, top-quartile funds raised in 2008 earned a median net IRR of 24.1%, while bottom-quartile funds return raised in the same year earned -16.8%.
Preqin found that top five performing buyout funds of vintage years 2006 to 2008, were Anacacia Partnership I, a 2007 fund with a 53.9% net IRR; American Securities Partners V, a 2008 fund with 52.1% IRR; Ares Corporate Opportunities Fund III, a 2008 fund with 34.7% IRR; Waterland Private Equity Investments, a 2006 fund with 32% IRR; and Actera Partners, a 2007 fund with 30.6% IRR.
Preqin ranked only funds for which it holds performance data and which have at least three funds in a similar strategy.
It also ranked the funds on consistency of performance. All of the funds sponsored by the top two performers on the list — Altor Equity Partners and Waterland Private Equity Investments — were in the top quartile between 1984 through 2008 and outperformed their benchmarks. Other firms in the top 10 of consistent performing buyout managers are Ares Management, Charlesbank Capital Partners, Inflexion Partners, TowerBrook Capital Partners, AEA Investors, Archer Capital, Patria Investimentos and Berkshire Partners.