Fund-level benchmarks are essential to private-equity analysis, capturing realized investor experience through returns reported net of fees, carried interest and other expenses. These benchmarks offer a valuable high-level view in private equity but reveal little about the underlying companies that ultimately drive returns. Holdings-based indexes complement this view by reflecting gross company-level returns, separating underlying asset returns from fund economics and enabling more precise attribution across sectors, regions and strategies.
Why a more granular view matters
Crucially, the MSCI Private Equity Holdings Indexes allow for a better sector-aligned view of private markets, cutting through the diversified lens of fund-level performance that can obscure true sector outcomes. (Using MSCI PACS, private companies are mapped into established public-market industry frameworks.1) For example, for information technology, the buyout holdings index slightly outperforms the broader buyout holdings index. While perhaps unexpected, an index of IT-focused buyout funds slightly underperforms the broader buyout-fund universe. While these funds are “focused” on IT, however, they actually contain some holdings from other sectors as well, likely dampening their fund-level performance. For that reason, this holding-level approach delivers a more meaningful sector-level benchmark for investors, managers and analysts evaluating exposure, risk and performance.