Secondaries outperformed all-strategy benchmark in Q3

The net pooled returns of secondaries funds beat ILPA's all-alternatives benchmark across a quarterly, yearly and 10-year basis.

Secondaries funds outperformed the all-alternatives benchmark in the third quarter of last year on a quarterly, yearly and 10-year basis, according to data from the Institutional Limited Partners Association.

The ILPA Secondaries Benchmark, which tracks pooled net internal rates of return, delivered 4.4 percent in the three months to 30 September, slightly down from 5 percent in the previous quarter. This was higher than the ILPA All Funds benchmark of 3.9 percent in the third quarter and 4.3 percent in the second.

Secondaries performed better than seven of the other strategies’ benchmarks on a quarterly basis, losing out only to European private equity and venture capital, which realised a net IRR of 6.8 percent in US dollar terms, and Asia-Pacificprivate equity and venture capital, which returned 5.4 percent.

The strategy has performed best across a 1-year period, accruing an IRR of 16.1 percent, lower only than US and Canadian private equity, dollar-denominated European private equity and venture, and euro-denominated European private equity &and venture.

ILPA’S data are based on returns for 3,804 funds.

In a 2018 outlook report published in early February by private equity advisor TorreyCove Capital Partners, the firm said it was “moderate underweight” on secondaries in 2018 due to the growing efficiency of the market having blunted its power as an opportunistic investment.