Leveraging Private Market Equivalents (PME) for Industry-Level Analysis
May 14, 2019
May 14, 2019
PME for Industry-Level Analysis: Why it Matters
Many LPs are already leveraging PMEs for portfolio analysis. Moreover, they are familiar with how a singular fund, sub-section or entire portfolio compares against various public indices. However, few LPs are using PME for industry-level analysis as a whole.
Leveraging PME for industry-level analysis can be valuable for LPs when:
- Determining what style or geography has consistently outperformed a public index over various years
- Presenting to an investment board or committee the importance of investing in the private markets
- Understanding how the private market performance compares to the public markets over different economic cycles
PME for Industry-Level Analysis: Example Usage
Technology solutions, such as Cobalt LP, enable LPs to directly access this insight. For example, Hamilton Lane leverages PME for industry-level analysis in their Annual Market Overview. The charts below highlight how Hamilton Lane is utilizing Cobalt to present this information by style:
The above charts highlight that even though the public markets have seen strong growth for a long duration, the private markets still offer the opportunity to outperform the public markets. Furthermore, while many LPs focus on picking a top quartile manager, the above charts can offer some reassurance. In some cases, even the average performance of the private markets is higher than the public markets return.
This unique analysis is just one example of how using PME for industry-level analysis can be leveraged using a technology platform such as Cobalt LP.
Learn more about PME through our whitepaper here.
Reach out to learn more about CobaltLP here.