The National Association of Investment Companies (NAIC) released its biennial report, Examining the Returns 2023: Further Evidence of Diverse-Owned Private Equity Firm Outperformance — the only quantitative study in the industry assessing the performance of diverse- and women-owned private equity firms.
The study, based on data from NAIC member firms, was conducted in collaboration with KPMG and GCM Grosvenor to ensure objectivity and transparency. Key findings include:
- The NAIC Diverse Private Equity Index consistently outperformed the benchmark Burgiss median return. It recorded a net Internal Rate of Return (IRR) of 17.23%, a net Total Value to Paid In (TVPI) of 1.68x, and Distributed to Paid-In Capital (DPI) of 0.66x. In comparison, Burgiss median performance was 11.58%, 1.37x, and 0.44x, respectively, representing almost 600 basis points of outperformance from an IRR perspective.
- Approximately 31% of funds in the NAIC Private Equity Index produced top-quartile net IRRs during the study period.
- The NAIC Private Equity Index generated an IRR in the first or second quartile 72.2% of the time and posted a TVPI and DPI in the first or second quartile around 83% of the time.
The 2023 study underscores the proficiency of diverse-owned private equity firms in identifying investment opportunities and executing strategies. “This underutilized segment of the private equity industry consistently outperforms established industry standards,” said NAIC President and CEO Robert L. Greene. “Our biennial study demonstrates that investing in diverse managers does not detract from fiduciary duty or the ability to generate superior returns. As the financial services industry evolves, embracing inclusivity becomes not just a moral imperative but a strategic and fiduciary necessity.”
With over 52 years of advocacy and performance under its belt, the NAIC is the trade association and largest network of diverse- and women-owned alternative investment firms. NAIC’s membership comprises more than 194 diverse-owned alternative investment firms collectively managing over $406 billion in assets under management. NAIC member firms invest with over 2,200 portfolio companies globally and consistently generate superior returns contributing to the growth of the retirement and asset management industries.