Private Capital Beta Revealed

Private capital beta – the mythological entity whose existence and value have been denied for decades on the basis of the evidences drawn from the dispersion of IRRs of private capital funds – may be among fund investors, new DaRC Room evidences reveal.

Immagine2Firstly, the dispersion of the return is found being an artificial consequence of the flawed reinvestment assumption embedded in the IRR calculation.

Secondly, in DaRC terms, the performances recorded by a coherent cluster of private capital funds tend, as time passes, are found converging harmoniously around their average (the Private Capital Beta) that in turn hovers around performance of the benchmark relevant for the characteristics of the analysed cluster of private capital funds, as described in the chart (Source: Synthetic Private Capital on Preqin data).

 

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