Members of the Institutional Limited Partners Association will soon have a private equity benchmark tailored specifically for them.
ILPA has selected consultant Cambridge Associates to create an ILPA-specific benchmark that will focus solely on the private markets investment performance data of funds in which ILPA members have invested.
“Some benchmarks might be skewed toward large pensions, some might be skewed toward endowments or perhaps some aren’t carrying data regularly or consistently,” ILPA executive director Kathy Jeramaz-Larson told sister site Private Equity International. “We will be using processes to make sure this is a representative sample so output is meaningful.”
ILPA members have previously expressed interest in such a benchmark, which will include performance data for private equity funds previously not captured by Cambridge.
“Through partnering with ILPA, Cambridge Associates hopes to broaden the universe of funds in our database, thereby making our benchmarks even more robust,” Cambridge managing director Astrid Noltemy said in a separate interview.
The difficulty of distinguishing true top-earners from more dubious claims of high rates of return has been a frequent thorn in the side of LPs. While the new ILPA benchmark will not enable all private equity limited partners to weed out questionable performance data, the project is likely to provide ILPA members with a new method of comparing their portfolios’ performance with that of other member organisations.
For a breakdown and analysis of the different industry benchmarks, all which attempt to measure fund performance in their own unique manner, see our Private equity's secret performance history feature.