In 2021, the US private equity and venture capital indexes posted their highest calendar year returns since 1999, potentially signaling a market peak and the end of over a decade of steady growth. For the year, the Cambridge Associates LLC US Private Equity Index® returned 41.3% and the Cambridge Associates LLC US Venture Capital Index® gained 54.6%.
Our annual analysis comparing private equity globally with public peers.
In the first six months of 2021, according to Cambridge Associates indexes, private equity and venture capital in the developed markets outperformed those in emerging markets.
In the first half of 2021, US private equity and venture capital returns continued the torrid pace that started in second quarter 2020.
This analysis includes our observations on key metrics by which private equity managers execute their strategy.
In 2020, the Cambridge Associates LLC Developed Markets (ex US) Private Equity and Venture Capital Index® returned 33.1% in USD terms.
In 2020, the US private equity and venture capital (PE/VC) indexes shook off first quarter declines to enjoy one of their best years ever, with returns in each quarter surpassing the previous one; for the year, the Cambridge Associates LLC US Private Equity Index® returned 27.8% and the Cambridge Associates LLC US Venture Capital Index® gained 50.1%. For PE, 2020 was the fourth-best year and for VC, it was the second.
Analyzing operating metrics can provide insights into the process by which private equity managers execute their strategy. This update to our annual report includes comparisons of private equity globally (roughly 9,600 companies in total) with public peers, as well as regional comparisons for approximately 5,000 US-based companies, more than 2,400 European companies, and more than 1,600 Asian companies acquired by PE firms from 2000 through 2019.
The Cambridge Associates LLC Developed Markets ex US Private Equity and Venture Capital (PE/VC) Index returned -1.5% in first half 2020 in USD terms after suffering significant losses (-10.8%) from the onset of COVID-19 in first quarter. The Cambridge Associates LLC Emerging Markets Private Equity and Venture Capital Index earned 4.7% due to a strong second quarter recovery of 11.4% and a modest pandemic-driven downturn earlier in the year.
First half 2020 was downright Dickensian (as in a “tale of two quarters”); first quarter returns were down as the COVID-19 pandemic began to close economies, while second quarter performance was strongly positive as public and private investments rebounded.