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NAIC Study Shows Diverse Private Equity Firms Excel

The latest biennial performance analysis conducted by the National Association of Investment Companies (NAIC) has unveiled remarkable results regarding diverse and women-owned private equity firms. Titled "Affirming the Returns 2025: Further Evidence of Diverse-Owned Private Equity Firm Outperformance," this report highlights the substantial lead these firms have maintained over traditional industry benchmarks.

Performance Metrics that Stand Out

The data from the NAIC Private Equity Index reveals an internal rate of return (IRR) of 16.0 percent, far surpassing the 9.0 percent return of the Burgiss median. This impressive margin of 700 basis points showcases not only the effectiveness of diverse investment managers but also their consistent performance across varied market conditions.

The report emphasizes several key metrics:

• - Total Value to Paid-In Capital (TVPI): 1.62x, compared to the Burgiss median of 1.31x.
• - Quartile Performance: A first or second quartile was achieved in 66.1 percent of the studied years.
• - Distributions to Paid-In Capital (DPI): Recorded at 0.65x, which is significantly higher than the Burgiss median of 0.44x.

Moreover, diverse managers outperformed the Burgiss median in DPI for around 81 percent of the assessed periods.

The Skills Behind the Success

According to Robert L. Greene, the President and CEO of NAIC, these impressive results underscore the proficiency and strategic vision of the managers represented in the index. He attributes their success to a blend of expertise in sourcing investment opportunities, creating enduring value, and ensuring strong alignment with investors. This data reveals a consistent and replicable pattern of performance over time, rather than isolated success.

The findings also bring to light an important narrative in the investment world; every firm highlighted as an outperformer began as an emerging manager approximately 15 years ago. This aspect reinforces the necessity for institutional investors to adopt emerging manager programs as credible and lucrative investment channels.

Collaboration for Transparency

To ensure the integrity of the report, NAIC collaborated with reputable entities. The performance data collection and compilation were managed by KPMG LLP, while GCM Grosvenor provided comprehensive benchmark performance analysis through various metrics over different timeframes.

About NAIC

The National Association of Investment Companies has over 54 years of advocacy and represents the largest network of diverse and women-owned alternative investment firms. With a membership that comprises over 175 diverse-owned firms, NAIC collectively manages more than $476 billion in assets. This network continually drives superior returns that contribute to the growth of both the retirement and asset management sectors.

For those interested in a more detailed analysis of these findings, the full report is available through NAIC’s website. Overall, this study not only showcases the remarkable performance of diverse private equity managers but also sets a precedent for institutional investments in the future.