- An analysis done by a professor at Oxford Saïd Business School estimates that investors paid $230B in performance fees over a 10-year period for returns that were similar to an inexpensive tracker fund costing just a few basis point, the Financial Times reports.
- "This wealth transfer from several hundred million pension scheme members to a few thousand people in private equity might be one of the largest in the history of modern finance," said Ludovic Phalippou.
- Those who gained the most were founders of Blackstone's (NYSE:BX) Stephen Schwarzman, Apollo Global Management's (NYSE:APO) Leon Black, KKR's (NYSE:KKR) Henry Kravis, and Carlyle Group's (NASDAQ:CG) David Rubenstein.
- His analysis indicates that large U.S. public pension plans earned ~$1.50 (net of fees) for every $1 invested in PE funds from 2006 to 2015, translating to annualized returns of ~11%, similar to the U.S. stock market over the same period.
- Blackstone said Phalippou's analysis has conceptual errors and was aimed at producing negative conclusions, while Carlyle said it's "inappropriate" to include other asset classes and strategies such as real estate, energy, and long-dated private equity with buyout funds.
- KKR also disagrees with Phalippou's paper, saying it's "based on flawed assumptions and selective engagement with the facts."