ASSET
MANAGERS
Private fund managers must leverage market benchmarks to effectively demonstrate their alpha-generating capabilities. Benchmarks serve as a critical reference point, allowing investors to evaluate a fund’s performance against industry standards and broader market trends. By comparing their returns to relevant benchmarks, fund managers can highlight their ability to outperform the market and deliver excess returns, or alpha, that result from skilled investment strategies rather than market-wide movements.
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Private Market data for Asset MANAGERS
Supporting managers' performance and valuation benchmarking needs in private marketsAlpha Ranking
Asset managers often suffer unfair peer group comparisons due to patchy nature of the data used to built IRR or TVPI quartiles. Either these data are not representative of the fund strategy and style or the number of data points is so low that quartile rankings are meaningless. Using an index that representative of private markets and of the fund strategy can solve this problem: fund cash flows are used to compute the fund's pure alpha and asset allocation alpha and truly reflect the outperformance of a fund manager relative to the market as a whole.
Benchmarking
A fund manager needs a representative benchmark to describe the risk and returns of a strategy and to showcase their market outperformance. But benchmarks build from data contributed by other managers invariably fail to be representative and do a poor job at describing private markets. Public indices are not better at representing the risk-return profile of private equities or infrastructure. privateMetrics is built at the asset level from a wide universe of 1.2 million private firms and thanks to the PECCS taxonomy allows building hundreds of representative benchmarks.
Comparables
Private market invetsors need comparables to decide to buy or sell, and to report the fair market value of portfolio companies. But robust comparables are almost impossible to build from raw transaction data: there are never enough recent deals with the right characteristics. privateMetrics is a model-based solution to this problem: an asset pricing model that predicts observables transaction prices correctly on average (by market segment) is used to shadow price thousands of private companies and produce robust comparables i.e., averages each month.
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the EDHEC Infrastructure & Private Assets Research Institute
