Apples and Oranges: Benchmarking Games and the Illusion of Private Equity Outperformance

Abstract

Private equity (PE) is widely viewed as an asset class delivering superior returns compared to public equity markets. A careful review of the latest data (as of end 2024) suggests that prior findings (Phalippou 2014, 2022) still hold. The performance of private equity is broadly in line with public markets in the US. There is little controversy about fund performance per se; disagreements stem from how benchmarks are chosen and how data is filtered. These findings raise fundamental questions about benchmarking standards, value creation, and the justification of high fees in the industry.