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State Street Global Exchange Private Equity Index Rebounds with a 3.99 Percent Return in the Second Quarter of 2018

Company Release - 10/30/2018 3:10 PM ET

BOSTON--(BUSINESS WIRE)-- The State Street Global Exchange® Private Equity Index (GXPEI) posted its second highest quarterly return of the past two years at 3.99 percent in the second quarter of 2018. The venture capital category held its lead for the second quarter in a row with a 4.64 percent gain, followed closely by buyout funds with a 4.18 percent return; but private debt lagged behind with a 1.90 percent return for the quarter.

The PEI is based on directly-sourced limited partnership data and represents more than $2.8 trillion in private equity investments, with more than 2,900 unique private equity partnerships, as of June 30, 2018.

“Overall the second quarter of 2018 has seen a good recovery from the volatile first quarter. However, the growth is not universal across the index,” said Will Kinlaw, global head of State Street Associates®, a division of State Street Global Exchange. "In particular, information technology and energy sectors stand out from the crowd, largely benefiting the venture capitalist and energy-focused funds. Although private debt funds show a below average return this quarter, their fund raising activity has been particularly strong in 2018. To date, they have raised almost the same amount of capital in the first two quarters of this year as they did in all of 2017.”

“The US dollar appreciated against major currencies, including the euro in the second quarter, partially due to rising interest rates and good economic data,” said Anthony Catino, managing director, Alternative Investment Solutions for State Street. “This contributed to a lower US dollar denominated return than euro denominated return for the Europe focused funds. Time will tell the overall impact of the dollar’s stability on FX returns as we head towards the end of 2018.”

Second Quarter Highlights Include:

  • Venture capital funds led the three main private equity strategies (Venture Capital, Buyout, and Private Debt) for the second quarter in a row.
    • The 4.64% return was the highest for venture capital funds since Q4 2014
  • Private debt was the only strategy to see a decrease in returns, dropping to 1.90% from 2.46% in Q1, posting the lowest returns for that strategy since Q1 2016.
  • Buyout funds returned 4.18% for the quarter, up from 2.09% in Q1, and the venture capital fund return of 4.64% was up from 3.78% in Q1.
  • Q2 2018 saw the US dollar appreciate 5.34% against the euro, and general USD appreciation against world currencies.
    • European-focused private equity funds experienced a 3.12% quarterly gain in USD-denominated terms (8.61% in EUR-denominated IRR).
    • In USD denominated terms, US focused funds returned 4.70% for the quarter, while the rest of the world returned 1.66%.
  • Among sectors, information technology funds led for the second straight quarter with a 7.05% quarterly return, up from 5.20% in Q1. They were followed by energy funds with a 4.62% quarterly return, rebounding from 0.62% in the previous quarter, and health care funds with a 4.24% quarterly return. Financials were the only sector to see a decrease in returns, generating 1.69% compared to 4.93% in Q1.

For additional insights, or to learn more about the GX Private Equity Index please visit, http://www.ssgx.com/peindex.

Index returns reflect capital gains and losses, income, and the reinvestment of dividends.

It is not possible to invest directly in an index. Index performance does not reflect charges and expenses associated with the fund or brokerage commissions associated with buying and selling a fund.

Index performance is not meant to represent that of any particular fund.

About State Street Corporation

State Street Corporation (NYSE: STT) is one of the world's leading providers of financial services to institutional investors, including investment servicing, investment management and investment research and trading. With $33.99 trillion in assets under custody and administration and $2.81 trillion* in assets under management as of September 30, 2018, State Street operates in more than 100 geographic markets worldwide, including the US, Canada, Europe, the Middle East and Asia. For more information, visit State Street’s website at www.statestreet.com.

*This figure is presented as of September 30, 2018 and includes approximately $28 billion of assets with respect to SPDR products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated.

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@StateStreet

Source: State Street Corporation