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Illustration: Aïda Amer/Axios

U.S. private equity returns fell just below S&P 500 returns for the 10-year period ending last June, according to a report released Monday morning by Bain & Company.

Why it matters: Private equity markets itself as beating public markets over long-term time horizons, and usually providing an illiquidity premium to boot. These new performance figures not only dent such claims, but provide fresh ammunition to critics of public pension investment in private equity funds.

Specific numbers: U.S. private equity fund IRR was 15.3% for the 10-year period, versus 15.5% for the S&P 500 public market equivalent.

  • "While a 15% average annual return net of fees is impressive even by private equity's own high standard, parity with public markets is not what PE investors are paying for," writes Bain.

Private equity's defense would be fourfold:

  • U.S. PE returns were strong over the past decade, and top-tier funds outperformed the S&P 500.
  • U.S. PE returns outperformed the S&P 500 over most other time periods.
  • European private equity returns are higher than their public market comp.
  • The last time we saw this sort of inversion was for the 10 years ending March 2000, and private equity easily outpaced public equity over the subsequent 10 years.

The real question is if private equity will be held accountable for the relatively lackluster results by limited partners, particularly in an era of rising progressive politics and progressively lower buyout fund returns. Not by blanket failure to support new funds, but by demanding more LP-favorable terms.

The bottom line: Private equity promises alpha. It hasn't delivered over the past decade. Expect that to be a major bone of contention this week in Berlin, where the world's largest private equity fund managers and limited partners meet for the annual Super Returns conference.

Go deeper

Oct 12, 2020 - Podcasts

Jeffrey Epstein's money trail

Jeffrey Epstein died more than a year ago, but the investigation into how he made his money is heating up. The latest is a New York Times report that private equity titan Leon Black might have paid Epstein to up $75 million over the years, which is much more than was previously disclosed.

Axios Re:Cap goes deeper with Matthew Goldstein, a New York Times business reporter who co-authored today's story.

3 hours ago - Sports

Unvaccinated athletes face 21-day quarantine at Beijing Olympics

Logos for the 2022 Winter Olympics at Yanqing Ice Festival in February 2021 in Beijing. Photo: Lintao Zhang/Getty Images)

Athletes, staff members and journalists at the 2022 Beijing Olympic and Paralympic Winter Games who have not been vaccinated against the coronavirus will be required to quarantine for three weeks, the International Olympic Committee (IOC) outlined in its newly-published "playbooks."

Why it matters: The quarantine period is longer than the Games themselves, meaning vaccinations or an earlier arrival date will be required to participate in or cover the Games.

Dan Primack, author of Pro Rata
5 hours ago - Economy & Business

FTX CEO predicts more U.S. crypto flight

Photo: "Axios on HBO"

FTX doesn't look much like a company valued at $25 billion. Its new headquarters, located in a sleepy part of The Bahamas, is so nondescript as to not even have a sign. But it does expect to soon have neighbors.

Driving the news: Founder and CEO Sam Bankman-Fried tells "Axios on HBO" to expect "more and more crypto flight from the states" if the U.S. doesn't soon create a regulatory regime for cryptocurrencies.