The Best-Performing Private Equity Funds Share These Two Attributes
With a 40 percent internal rate of return, these funds far outperform others.
A group of private equity funds delivering eyebrow-raising performance aren’t exclusively focused on one industry or located in a specific region. They share a certain size and focus — two critical attributes helping them beat competitors.
In 2023, Mantra Investment Partners, a firm that tracks and invests in small private equity funds, analyzed the historical internal rate of return (IRR) and multiple on invested capital (MOIC) across more than 5,000 deals, 500 funds, and 242 private equity firms. The analysis quantified what the firm had observed for many years: private equity strategies that have less than $350 million in assets, and that focus on investing in esoteric industries or businesses, meaningfully outperformed bigger funds.