Gains in the State Street Global Exchange Private Equity Index Slow for First Time in Two Years

The State Street Global Exchange® Private Equity Index (GXPEI) ended the first quarter of 2018 with a slight increase of 2.44 percent. The Buyout funds category ended its streak of eight quarters of outperformance with a 2.09 percent gain, lagging behind the 3.78 percent return from Venture Capital funds and 2.46 percent from Private Debt funds.

The PEI is based on directly-sourced limited partnership data and represents more than $2.8 trillion in private equity investments, with more than 2,800 unique private equity partnerships, as of March 31.

“In the first quarter of 2018, volatility spiked across all asset classes amid an environment of continued geopolitical uncertainties, escalating risks of trade wars and rising interest rates,” said Will Kinlaw, senior managing director and global head of State Street Associates®, a division of State Street Global Exchange. “Managers’ quarterly contribution rate dropped to a two year low and exit activities declined as well, indicating a tendency toward caution.”

First Quarter Highlights Include:

• Buyout funds ended their eight-quarter streak of realizing the highest returns among the three main private equity strategies (Buyout, Venture Capital and Private Debt).
• All strategies saw quarterly decreases in the level of returns.
  • Venture Capital led with a 3.78% return, down from 4.21% in Q4.
  • Private Debt funds with 2.46%, down from 3.15% in Q4.
  • Buyout saw the largest drop, falling to 2.09% from 5.23% in Q4.
• Q1 2018 saw continued depreciation of the USD against the Euro of 2.42%.
  • European-focused private equity funds experienced a 2.88% quarterly gain in USD-denominated terms (0.41% in EUR-denominated IRR); US-focused funds returned 2.44%; and funds focused on the rest of the world gained 1.92%.
• Among sectors, Information Technology funds led with a 5.20% quarterly return, down slightly from 5.91% in Q4. They were followed by Financial funds – the only sector to see an increase in returns from the previous quarter – rising to 4.93% from 2.66% in Q4. Industrials, the leader for the previous two quarters, saw returns drop to 1.56% from 6.68% in Q4.

For additional insights, or to learn more about the GX Private Equity Index please visit http://www.ssgx.com/peindex.

Index returns reflect capital gains and losses, income, and the reinvestment of dividends.

It is not possible to invest directly in an index. Index performance does not reflect charges and expenses associated with the fund or brokerage commissions associated with buying and selling a fund.

Index performance is not meant to represent that of any particular fund.

About State Street Corporation

State Street Corporation (NYSE: STT) is one of the world's leading providers of financial services to institutional investors, including investment servicing, investment management and investment research and trading. With $33.90 trillion in assets under custody and administration and $2.70 trillion* in assets under management as of June 30, 2018, State Street operates in more than 100 geographic markets worldwide, including the US, Canada, Europe, the Middle East and Asia. For more information, visit State Street’s website at www.statestreet.com.

*Assets under management include the assets of the SPDR® Gold ETF and the SPDR® Long Dollar Gold Trust ETF (approximately $33 billion as of June 30, 2018), for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) serves as marketing agent; SSGA FD and State Street Global Advisors are affiliated.

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