Research & Data

An ABC of PME

The practical problem facing investors is not that there is no way to compare the returns of illiquid and liquid assets, but that there are too many, Landmark Partners argues in its latest whitepaper.

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Institutional investors, fund managers and consultants have been trying to compare private equity returns against public markets ever since the pioneering work of Long and Nickels on the Index Comparison Method, or ICM (Long and Nickels, 1995). However, those investors quickly get lost in a jungle of different approaches, each of which is aiming to avoid some perceived shortcomings of its predecessors and trying to give a better estimation of the generated return relative to a benchmark, write Landmark Partners’ Ian Charles and Barry Griffiths.

In their latest white paper, they discuss the ins and outs of various models, establish that ‘Direct Alpha’ is the simplest of these methods to calculate and demonstrate the relative numerical reliability of these methods over a large set of real-world cash flow data.

Click here to read an  An ABC of PME – Landmark Partners in full.