As private equity evergreen funds continue to grow and attract an increasing pool of capital, a new Scientific Infra & Private Assets (SIPA) report entitled “Rise of Private Equity Evergreens: Moving from IRRs to Time-Weighted Returns” explains that evaluating the performance of these funds requires a shift away from internal rates of return (IRRs) to time-weighted returns.

Drawdown fund IRRs, quartile rankings, and manager benchmarks are not appropriate and potentially misleading when evaluating evergreen fund performance. Evergreen vehicles will likely play a big role in the retirement push in the US and other jurisdictions, making it critical to understand how to evaluate performance and risk.

We look at two long standing private equity evergreen funds – Partners Group Global Value SICAV and Pantheon Ventures AMG Pantheon fund – and evaluate their performance against the flagship private2000® indices. Most evergreen funds compare their performance to a listed equities benchmark, such as MSCI World. However, listed and private equities are distinct markets with different dynamics.