privateMetrics®
Indices & Benchmarks
privateMetrics indices deliver reliable insights into the risk and returns of private equity investments at the asset level. Backed by a dedicated team, these indices are current, granular and customisable. Updated monthly.
index data offering
privateMetrics Market Indices are a series of flagship indices built from a representative dataset of 2,000 private companies worldwide that represent the global private equity market at the asset level.
PECCS Indices & Benchmarks are built from a larger dataset of 1M+ private companies in 130 countries and include several thousand combinations of market segments allowing granular comparisons and customisations.
privateMetrics Market Indices
privateMetrics® market indices capture the performance of private companies across 30+ key markets. The private2000 flagship includes the largest 2,000 constituents that represent approximately 25% of the private market capitalization in each country. The private US and private Europe represent the constituents from each geography among the combined private2000 and private3000 flagships.
using privateMetrics indices
for investment selection and performance monitoringInvestors with fund or investment cash flows only cannot solely rely on fund IRRs or TVPI to measure performance or select managers because they are based on stale, backward-looking and often inaccurately reported NAVs. With privateMetrics market indices, investors can use the most representative benchmark of the fund or portfolio strategy to compute the 'direct alpha' of the manager or investment team. Direct Alpha is an improved variant of the PME methodology (see link below).
- Download complete use case files including a step-by-step description of the methodology and data and a working spreadsheet showcasing the use of privateMetrics in fund selection and alpha tracking.ÂDownload the Use Case Files
Investors with time-weighted returns for their private equity investments can compare the risk-return profile of their portfolio or fund with a representative market index measuring the risks and performance of the relevant market, and compute risk, correlations, return contributions and manager outperformance relative to a market index as one does for any other asset class.
- Download complete use case files including a step-by-step description of the methodology and data, and a working spreadsheet showcasing the use of privateMetrics in benchmarking.ÂDownload the Use Case Files
FOR STRATEGY AND RISK MANAGEMENT
Investors needing capital market assumptions or expected returns, risk and correlation measures for portfolio allocation research and analysis can use privateMetrics indices to represent the private equity asset class in a multi-asset setting. Thanks to it rich risk data and absence of serial correlation in the return, there is not need to artificially un-smooth appraisal data.
- Download complete use case files including a step-by-step description of the methodology and data, and a working spreadsheet showcasing the use of privateMetrics in capital market assumptions and strategic asset allocation.ÂDownload the Use Case Files
Investors needing robust risk metrics cannot use reported appraisals because their typical lack of market calibration leads to very low and completely unrealistic reported levels of risk and wildly over-estimated risk-return profiles. privateMetrics measures the ongoing value of thousands of private equity companies and the resulting market indices exhibit realistic volatility and no smoothing. As such they allow computing robust risk metrics such as VaR, Maximum Drawdown, and a believable Sharpe ratio.
- Download complete use case files including a step-by-step description of the methodology and data, and a working spreadsheet showcasing the use of privateMetrics in risk reporting.ÂDownload the Use Case Files
privateMetrics constituent dataset
A representative datasetGeography
ActivitY
lifecycle
revenue
customer
The selection process for the 2000 constituents of the privateMetrics Index is governed by a rigorous and structured methodology to ensure a fair and accurate representation of significant private companies across various markets.
Universe Determination:
The initial step involves establishing eligibility criteria where companies must be private, for-profit, non-publicly traded, and non-government-owned. Eligibility is restricted to companies that are not in dissolution, liquidation, or bankruptcy and are headquartered in targeted countries with at least two fiscal years of accessible financial data and non-negative sales. Companies that are subsidiaries of public entities or are majority-controlled by such entities are excluded, except if the parent company is private and has accessible financials.
Converting Weights to Number of Constituents:
Weights are assigned to each country and activity based on factors like GDP, private market size,
and foreign investment restrictions. These weights determine the distribution of the 2000 index constituents in the private2000 index. The number of constituents per country is calculated by applying these weights to the total number of constituents and rounding down. Discrepancies from rounding are adjusted by ranking the differences and reallocating constituents to address the largest discrepancies first.
Company Selection within Each Country-Activity Combination:
Within each country and sector, companies are ranked based on their valuation as estimated by the privateMetrics factor model. The selection process picks the highest-valued companies until the designated number for each country and activity is filled. This method ensures inclusion of the most influential and significant players in each sector and market.
Overall, this methodology not only reflects the dynamics of the private markets effectively but also maintains fairness and precision by considering the economic and investment characteristics unique to each region.
PECCS Indices & benchmarks
Customisable by geography, activty, revenue and customer models, lifecycle and value chain.The PECCS indices are a specialized suite within the privateMetrics framework, designed to reflect the nuanced performance of private markets across various segments. These indices leverage the PECCS classification system, which segments private companies by industry, lifecycle phase, revenue model, and geographical location, allowing for a detailed and custom-tailored analysis.
By offering a combination of up to multiple PECCS classes from a database of over a million companies, the indices provide investors with precise, customizable benchmarks tailored to specific investment strategies or portfolio needs, encompassing a broad spectrum of private market dynamics across 130+ countries.
customising PECCS BENCHMARKS
Custom PECCS benchmarks offer several key advantages:
1. Tailored Insights: Investors can create benchmarks that align closely with their specific investment strategies or portfolio characteristics. This customization allows for precise comparison and performance assessment based on unique criteria such as geographic focus, industry sector, lifecycle phase, or revenue model.
2. Strategic Alignment: By mixing and matching different segments of the PECCS classification, investors can develop benchmarks that reflect their actual or intended asset allocation. This ensures that the benchmark serves as a more accurate reference point for evaluating investment performance and decision-making.
3. Enhanced Decision Making: Custom benchmarks enable investors to assess the value and performance of their portfolios against a more relevant market segment, facilitating better-informed strategic decisions, such as asset allocation, risk management, and timing of entry or exit.
4. Avoidance of Broad Market Noise: Unlike broad market indices, custom PECCS benchmarks filter out irrelevant market data, focusing only on segments pertinent to the investor’s specific interests. This results in a clearer understanding of the factors driving performance in the relevant market niches.
5. Flexibility and Scalability: The ability to define benchmarks by combining various PECCS classes and geographies means that benchmarks can be scaled or adjusted as investment strategies evolve or as new data becomes available.
Overall, custom PECCS benchmarks empower investors with the tools to generate finely tuned, strategic insights into the private markets, enhancing the effectiveness of their investment process.