StepStone finds emerging managers—particularly Fund Is—can serve as an attractive source of excess returns within a diversified private equity portfolio. Identifying a top-performing Fund I can lead to persistent outperformance and compounding value across vintages, and the formation of durable long-term partnerships.
The case for emerging managers
Stepstone
Research
8 Pages
Key Takeaways
Early Funds Outperform: Across multiple performance measures, our data suggests that early funds outperform, with performance declining progressively as fund sequence advances.
Small Funds Do Better: Fund Is with less than $500 million in commitments show a clear advantage, with 67% delivering above-median returns, compared with 44% for funds between $500 million and $1 billion.
Long-Term Partnership: Among managers that delivered first-quartile performance in their inaugural funds, 43% went on to achieve first-quartile returns in Fund II, while 66% delivered above-median performance.
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