Private Equity and Venture Capital Funds in ex U.S. Developed

Private Equity and Venture Capital Funds in ex U.S. Developed and
Emerging Markets Lagged Public Equities but Delivered Solid Positive
First Quarter Returns, According to Cambridge Associates Benchmarks 
Media Sector Posted Largest Quarterly Gain in Developed Markets
Index, Continuing Trend From 2011, While Financial Services Led the
Way among Larger Sectors in Emerging Markets 
BOSTON, MA -- (Marketwire) -- 09/25/12 --  Helped in part by a
relatively stronger Euro, private equity and venture capital funds
invested primarily in developed and emerging markets outside the U.S.
joined public equities worldwide in delivering strong results for the
first quarter of 2012. However, these alternative asset classes were
largely outperformed by their public counterparts, according to a new
commentary from Cambridge Associates LLC (C|A). 
Following a small loss in the final quarter of 2011, the Cambridge
Associates LLC Global ex U.S. Developed Markets Private Equity and
Venture Capital Index returned 7.5%, in U.S. dollar terms, for the
three-month period ending March 31, 2012. For comparison, the
comparable public equity index (MSCI EAFE) earned 10.9% for the same
period. The Cambridge Associates LLC Emerging Markets Private Equity
and Venture Capital Index improved more than five percent from its
prior-quarter return to earn 6.4% for the first quarter. Its
corresponding public market benchmark (MSCI Emerging Markets Index)
earned 14.1%.  
The table below provides comparative performance data of the two CA
benchmarks versus their public markets counterparts over a variety of
time horizons ending on March 31, 2012. 


 
  Global ex U.S. Developed and Emerging Markets Private Equity and Venture  
                              Capital Indices                               
                         Returns (%) in U.S. Dollars                        
                        Periods ending March 31, 2012                       
                                                                            
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       For the periods ending               1    3     5     10    15    20 
            March 31, 2012           Qtr. Year Years Years Years Years Years
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 ex U.S. Developed Markets PE and VC  7.5  4.3  17.2   4.1  14.8  13.9  13.8
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          Emerging Markets                                                  
              PE and VC               6.4  1.8  21.6  10.8  12.0   8.5   8.4
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                                Other Indices                               
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              MSCI EAFE              10.9 -5.8  17.1  -3.5   5.7   4.2   5.8
----------------------------------------------------------------------------
        MSCI Emerging Markets        14.1 -8.5  25.4   5.0  14.5   7.5   8.2
----------------------------------------------------------------------------

 
Sources: Cambridge Associates LLC, MSCI Inc., Standard & Poor's, and
Thomson Reuters Datastream. MSCI data provided "as is" without any
express or implied warranties. 
The CA developed markets index outperformed the MSCI EAFE in every
period listed in the table above except for the first quarter. CA's
emerging markets index was less consistent, but outperformed its
public equities counterpart, the MSCI Emerging Markets Index, in four
of the seven periods listed. 
For the Quarter, the 2005 Funds Topped both the Developed and
Emerging Markets, and Every Large Vintage Year in Each Index Had a
Positive Return 
Funds launched in 2006, the largest vintage year in the developed
markets index, representing almost one-third (31.6%) of its value,
earned 8.5% in the first quarter. Of the five significantly sized
vintage years in the developed markets index, the 2005 funds, the
third largest vintage, returned 8.9%, making it the top performer of
the group. A strong media sector was the primary driver of that
vintage year's performance. All five of the largest vintages had
positive earnings for the quarter. 
The emerging markets index was more concentrated than the developed
markets index, with only four vintage years representing 5% or more
of the index's value. As in the developed markets index, all of these
significantly sized vintages yielded positive returns for the
quarter. The 2005 vintage funds, representing almost one-fifth (19%)
of the index's value, again topped the list, earning the same return
as their developed market counterparts: 8.9%. Their performance was
due primarily to valuation increases in financial services, IT, and
manufacturing. The largest vintage in the emerging markets index,
funds launched in 2007, earned a 6.4% return and represented 38.4% of
the index's value. 
All of the Largest Sectors in both Indices also had Positive Returns
for the Quarter. Media Was the Top Sector in the Developed Markets
Index, Financial Services in the Emerging Markets Index 
"Although there was little improvement in the underlying economic
conditions in Europe -- and for the most part, elsewhere -- the
largest sectors in each index were positive for the quarter, which
helped drive fund performances across the board," said Miriam
Schmitter, Managing Director and head of Cambridge Associates'
international private equity and venture capital research. "Of the
seven largest sectors in the developed index, media was far and away
the top performer, returning 21.5% for the quarter. This continued a
long-standing trend for that sector, which was also the top performer
among meaningfully-sized sectors for the previous year. In the
emerging markets index, financial services was the best-performing
sector, earning 10.2% for the quarter. Consumer, perennially the
largest sector in each index, returned 10.4% in the developed markets
index and 6.3% in the emerging markets index." 
This was the first time in a year that all of the meaningfully-sized
sectors in the emerging markets index earned positive returns in a
quarter. 
Capital Calls Rose in the Developed Markets Index but Fell in
Emerging Markets; Capital Distributions Were Down in Both Indices 
Fund managers in the developed markets index raised $8.9 billion from
their investors during the first quarter, an 11.2% increase from the
quarter prior. Capital distributions to investors, however, were down
sharply, to $6.6 billion -- a 53.7% decline and the smallest capital
distribution to investors in almost two years. Investors in the 2006
and 2007 funds responded to the majority of the capital calls,
contributing almost 72% of the total capital collected. Investors in
the 2004 and 2005 funds collected the bulk of the capital
distributions -- roughly 50% of the total. 
In the emerging markets index, capital calls and distributions both
dropped from the prior quarter. Contributions were down almost a
quarter (24%), to $2.8 billion; distributions fell to $1.7 billion, a
45% drop. Fund managers of the largest vintage year, 2007, called
almost $1.3 billion from their investors, representing 48.4% of the
total. Managers of the 2005 vintage year funds returned more than
$700 million to their investors, or 41% of the total capital returns
for the quarter. 
The Bulk of Developed Markets Investments Continued to be in Europe  
Fund managers in the developed markets index continued to place the 
great majority of their capital investments -- a total of 87% -- into
companies based in Western Europe. This was 8% higher than the
historical average for the index. Companies based in the U.K
represented the greatest single-country weight in the index, 22%, and
also yielded the highest return: 12.8%. 
Mainland China and India represented the majority (54%) of the value
of the emerging markets index and together returned, on a
dollar-weighted basis, 6.4%. Companies based in mainland China earned
the worst return of the three largest regions, 3.6%.  
Brazil dropped below the threshold for being considered
meaningfully-sized in the emerging markets index, leaving just
mainland China, India, and Russia in that category. Of the three,
companies in Russia came out on top for the quarter, returning 18%.
India-based companies earned 11.8%. 
About CA and the Indices
 Founded in 1973, Cambridge Associates is a
provider of independent investment advice and research to
institutional investors and private clients worldwide. Today the firm
serves over 900 global investors and delivers a range of services,
including investment consulting, outsourced portfolio solutions,
research services and tools (Research Navigator(SM) and Benchmark
Calculator), and performance monitoring, across all asset classes.
The firm compiles the performance results for more than 4,800 private
partnerships and their nearly 65,000 portfolio company investments to
publish proprietary private investments. Cambridge Associates has
more than 1,000 employees serving its client base globally and
maintains offices in Arlington, VA; Boston; Dallas; Menlo Park, CA;
London; Singapore; Sydney; and Beijing. Cambridge Associates consists
of five global investment consulting affiliates that are all under
common ownership and control. For more information about Cambridge
Associates, please visit www.cambridgeassociates.com. 
Cambridge Associates has been selected to provide data and to develop
and maintain customized industry benchmarks for a number of prominent
industry associations, including the Australian Private Equity &
Venture Capital Association Limited (AVCAL); the African Venture
Capital Association (AVCA); the Hong Kong Venture Capital and Private
Equity Association (HKVCA); the Indian Private Equity and Venture
Capital Association (IVCA); the New Zealand Private Equity & Venture
Capital Association Inc. (NZVCA); and the National Venture Capital
Association (NVCA). Cambridge also provides data and analysis to the
Emerging Markets Private Equity Association (EMPEA). The pooled means
represent the net end-to-end rates of return calculated on the
aggregate of all cash flows and market values as reported to
Cambridge Associates by the funds' general partners in their
quarterly and annual audited financial reports. These returns are net
of management fees, expenses, and performance fees that take the form
of a carried interest. 
Inquiries about these indices should be addressed to: Frank Lentini
at Sommerfield Communications, 156 Fifth Avenue Suite 1219, New York,
NY 10010; 212.255.8386; (fax) 212.255.8459; email
lentini@sommerfield.com. 
Media Contact:
Frank Lentini
Sommerfield Communications, Inc.
212-255-8386
lentini@sommerfield.com 
 
 
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