DailyBubble News
DailyBubble News

PE funds remain strong, but turbulence lays ahead


Private equity fund performance remained robust through the end of 2021 despite macroeconomic factors affecting global markets. However, analysts expect a softening could be on the horizon.

PE funds delivered a strong one-year showing, with a 46.6% return through Q4 2021, as fundraising performance—led by mega-funds, vehicles sized at $5 billion or more—shone bright. However, analysts expect these numbers to soften in the following quarters, reflecting the impact of inflation and rising interest rates, according to our latest Global Fund Performance Report.

Meanwhile, PE fundraising totals are on pace to potentially set new record highs, as firms are currently in what PitchBook analysts call “perhaps the most crowded fundraising market in history,” according to our latest US PE Breakdown.
 

 

Real estate funds also performed well through 2021. The asset class clocked a 24.8% rolling one-year horizon IRR through Q4 2021, its best showing since Q2 2011.

And while preliminary data shows real estate fund performance may slow in the near future, weighed down by a volatile market in 2022, firms are continuing to raise real estate funds. Blackstone, for instance, is said to be nearing a final close of a $30.3 billion real estate fund, which would be the largest ever in the sector.

Analysts expect real estate performance may see a boost as workers return to the office, in-person retail activity climbs and skepticism of metropolitan living declines, but overall, analysts expect the asset class will be unable to maintain its recent high returns.
 

Read more: Global Fund Performance Report

Featured image by whiteMocca/Shutterstock



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