PRIVATE EQUITY vs THE STOCK MARKET
Does private equity really beat the S&P 500?
Private equity has spent 30 years marketing itself as the smart-money escape hatch from public markets — higher returns, lower volatility, "uncorrelated" alpha. The pitch is powerful. The reality, once you line up the numbers, is more complicated than the sales deck.
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The 25-year scoreboard (2001–2025)
Both series are net-of-fees, calendar-year, in USD. PE is the Cambridge Associates US Private Equity Index. Stocks are the S&P 500 Total Return (dividends reinvested).
Average annual returns by lookback
Compound annualized returns across the standard institutional windows. "Since inception" here means since 2001 (the earliest full year both series cover); the CA US PE Index itself dates to 1986.
Year-by-year returns
Calendar-year returns. Green cells win the year; red cells lose. The pattern is more interesting than any single average.
What the data actually says
The headline — "PE has beaten stocks by roughly 3–4% per year over 25 years" — is technically true. But the composition tells a very different story:
PE crushed the crisis years.
2001–2002 dot-com bust and 2008 GFC: PE drew down materially but far less than the S&P 500. In 2001–2002 the S&P TR lost roughly 34% cumulative while CA US PE lost about 21%. In 2008, S&P TR was −37% vs. PE at −24%.
Takeaway: A big share of PE's headline outperformance comes from having less-bad crisis years, not from getting rich in the good ones. Some of this is real (better companies, active management); some is smoothing from private valuations that update quarterly rather than in real time.
2015–2024 was a coin flip.
Over the last decade of "peak PE" fundraising, PE didn't clearly win. In several years (2013, 2019, 2020, 2023, 2024) the S&P 500 TR outperformed the CA US PE Index — sometimes by wide margins (2023: +26% S&P vs. +9% PE; 2024: +25% S&P vs. +10% PE).
Takeaway: The recent decade of the "PE premium" has been mostly public-market strength. Bain's own 2026 Global PE Report notes: "US stocks have outperformed US buyouts over the past 10 years."
The 2021 blow-off top was real — and it's still unwinding.
2021 posted PE's biggest calendar-year return on record: +41.3%. That number was marked, not realized — ZIRP-era valuations on illiquid holdings. Since then, distributions have collapsed (Bain 2026: DPI at multi-decade lows), and the 2022–2025 returns show the digestion.
Takeaway: When you buy a PE fund today at NAV, you are partly buying 2021 marks that haven't been tested by an exit market. This is why "the number on paper" and "the number in your pocket" have diverged so sharply in recent years.
Three things this comparison does not capture
- Illiquidity. If you buy the S&P 500 you can sell Monday morning. A PE fund locks capital for 10–12 years. Institutional investors accept illiquidity in exchange for a "premium." Individual investors rarely price that trade-off correctly.
- Smoothing. PE fund NAVs are marked quarterly, slowly, off private-comps. The reported volatility of PE is roughly half that of the S&P 500 — but that's an accounting artifact, not economics. When you mark to market properly, PE is about as volatile as public equity.
- Access. The average CA PE Index number includes top-quartile Blackstone/KKR funds and bottom-quartile also-rans. Institutional LPs work hard to be in the top half. Retail products (BDCs, semi-liquid interval funds) often can't buy the top funds — you get a different, generally worse, return distribution.
Methodology & data sources
Private equity series: Cambridge Associates US Private Equity Index — calendar-year, net-of-fees, pooled time-weighted return.
Cambridge Associates does not publish this data set publicly for free. The values shown here are compiled from publicly available secondary references, primarily:
- Bain & Company — Global Private Equity Report (annual editions 2016–2026)
- Kaplan & Sensoy — "Private Equity Performance: A Survey" (Annual Review of Financial Economics, 2015)
- Harris, Jenkinson & Kaplan — "How Do Private Equity Investments Perform Compared to Public Equity?" (Journal of Investment Management, 2016)
- Financial press coverage: Wall Street Journal, Financial Times, Bloomberg, Institutional Investor
Treat the PE numbers as widely-cited approximations, not authoritative. For definitive figures, consult a Cambridge Associates subscription, Bloomberg, or Preqin data feed. This page is manually refreshed when new Bain Global PE Reports are released (typically each March).
S&P 500 series: Yahoo Finance ^SP500TR
— S&P 500 Total Return Index, calendar-year change (year-end
close vs. prior year-end close). Refreshes daily via our GitHub Actions
workflow.
YTD 2026 note: PE returns are reported at a one-quarter
lag; full-year 2026 PE data will not be available until early 2027.
The S&P 500 YTD line uses the most recent close in data/sp500tr.csv.
Reminder: None of this is investment advice. Past performance is not indicative of future results. Historical benchmarks are not the same thing as any specific fund or product you might actually invest in. Always do your own research or talk to a financial professional.