PE IRR

Fund of Funds Still in the Game, But Pressure is on Performance

by

March 13, 2014

Private Equity Fund of funds are having a tougher time closing new funds and the amount raised by such funds has been trending downwards since peaking in 2007, despite improved fundraising amounts in other segments of the PE market, according to a special repotrt from Preqin. The relatively poor performance of FoFs compared to other PE segments is one reason.

 

It only slightly outperforms venture capital, according to the data analyzed by Preqin. The segment is still a key part of the market, representing some USD 288 billion raised in the past ten years. And an investor survey says they are satisfied with the returns of their FoFs, according Preqin, but its analysts also said that the FoFs will need to generate superior returns in order to justify the double layer of management fees intrinsic to such vehicles. (Image source: Preqin)

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