Preqin announces enhancements to Private Capital Indices
Preqin, the global leader in alternative assets data, tools, and insights, today announced enhancements to its Preqin Private Capital Indices methodology, resulting in a one-off refresh of all historical index data points. The updated methodology underpins Preqin’s private capital indices that capture returns worth over $11.7 trillion across over 14,000 private capital funds worldwide. These indices aim to deliver the most precise, complete, and timely performance data in private markets.
These enhancements to the methodology reflect Preqin’s commitment to driving transparency across the global alternatives market, catering to the varying needs of financial professionals who invest in, allocate to, or advise on alternatives.
Fabien Chen, Senior Vice President, Head of Benchmarks, at Preqin said, “What we have been seeing in recent years is a democratization of private markets. This has created new opportunities and attracted more participants from fund managers to investors to advisors — all eager to gain a competitive edge in performance and growth measurement. As a response to this growing demand, Preqin Private Capital Indices provide a reliable benchmark that empowers financial professionals to make informed investment decisions and drive meaningful performance analysis.”
Most private market investors still refer to a public index when measuring performance
Preqin research indicates that the alternatives industry is on course to expand by almost 80 per cent and set to exceed $30 trillion in assets under management (AUM) by 2030 globally, up from $16.8 trillion at the end of 2023. As the industry grows in size, the range of private markets investors is also expanding. Examples include traditional institutional investors who on average increased their alternative allocations to a fifth of their portfolios in 2023, while private wealth fundraising reached an inflection point. Illustrating this trend, large fund managers were at the forefront, with KKR stating that 15 percent of the capital raised in recent years came from individual investors. Preqin expects that to reach 30 to 50 percent over the next few years.
Yet, as private markets’ investor base continues to expand, accessing trustworthy data remains a challenge for both investors and fund managers. Even sophisticated investors encounter difficulties when it comes to accessing and interpreting private market data, often resorting to public benchmarks. This is because there is a lack of suitable alternatives. When Preqin studied the use of private market benchmarks to inform private investments within broader policy benchmarks, 25% to 30% of investors use private market benchmarks, leaving the majority who use a public index.
Aiming to address these gaps and issues around transparency, Preqin’s methodology enhancements help establish true and uniform benchmarks to ensure market participants have similar rules of engagement and measurements of success. This moves the industry closer towards the establishment of standardized performance measures, aiming to shift closer to the public markets’ practices and conventions.
Preqin launches five new indices covering private debt, real estate, and infrastructure
Preqin Private Capital Indices were created to track the quarterly performance of private capital closed-end funds globally, serving as time-weighted return indices, including global and regional indices, for all asset classes and key strategies. They are updated every 90 days after quarter-end and include preliminary quarterly data.
Preqin extracts performance data from four available data-sourcing channels: fund manager quarterly reports to investors, Freedom of Information Act (FOIA), voluntary data contributions, and public data. Preqin Data and Research teams source, verify, and validate performance data daily to ensure its quality. This reduces survivorship bias and improves the reliability of the indices.
Alongside these methodological enhancements, Preqin introduced five new indices covering private debt, real estate and infrastructure. These join the existing 45 private capital indices:
- Preqin Global Private Debt – Direct Lending (All) CE Index (USD, F)
- Preqin Global Real Estate – Core Plus CE Index (USD, F)
- Preqin Global Infrastructure – Core CE Index (USD, F)
- Preqin Global Infrastructure – Core Plus CE Index (USD, F)
- Preqin Global Infrastructure – Value Added CE Index (USD, F)
