Alternative assets have had a greater internal rate of return (IRR) over one, three, five and ten years than major indices including the S&P 500, MSCI Europe and MSCI Emerging Markets.
Information provider Preqin groups these classes under ‘private capital’ and includes private equity, private debt, real estate, infrastructure and natural resources.
The Preqin Index, which is a measure of returns on capital invested, show that private capital funds reached 322 index points by the end of 2015, from a starting point of 100 at the end of 2000. This is far ahead of the S&P 500 at 208 points, which according to Preqin illustrates the greater returns potential of private equity portfolios.
Distressed private equity, including distressed debt, turnaround and mezzanine funds was the best performing strategy, reaching 494 points.
According to the firm, private equity firms hold the majority of assets, at $2.7 trillion (€2.4 trillion), followed by private real estate at $809 million, natural resources at $404 billion and infrastructure with $331 billion.
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