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.

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Sep 22, 2020 - World

Beijing draws Chinese companies even closer

Illustration: Annelise Capossela/Axios

Chinese Communist Party Secretary Xi Jinping announced last week that the party must strengthen its leadership over private companies, and that entrepreneurs must meet the party's needs. 

Why it matters: Xi's new announcement will increase fears that Chinese businesses may serve as a Trojan horse for the CCP.

Updated 14 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 7 p.m. ET: 32,949,407 — Total deaths: 995,658 — Total recoveries: 22,787,799Map.
  2. U.S.: Total confirmed cases as of 7 p.m. ET: 7,107,673 — Total deaths: 204,738 — Total recoveries: 2,750,459 — Total tests: 101,298,794Map.
  3. States: 3 states set single-day coronavirus case records last week — New York daily cases top 1,000 for first time since June.
  4. Health: The long-term pain of the mental health pandemicFewer than 10% of Americans have coronavirus antibodies.
  5. Business: Millions start new businesses in time of coronavirus.
  6. Education: Summer college enrollment offers a glimpse of COVID-19's effect.

NYT: Trump paid $750 in federal income taxes in 2016 and 2017

Photo: Chip Somodevilla/Getty Images

The New York Times has obtained more than two decades' worth of tax-return data from Trump and the companies that make up his business, writing in an explosive report that the documents "tell a story fundamentally different from the one [the president] has sold to the American public."

Why it matters: The Times' bombshell report, published less than seven weeks before the presidential election, lays bare much of the financial information Trump has long sought to keep secret — including allegations that he paid $750 in federal income taxes in 2016 and 2017, and has over $300 million in personal debt obligations coming due in the next four years.