Private capital continues to outperform public markets over the long term

New data from UK Private Capital and PwC shows that private capital returns outperform public markets over a 10-year horizon.

The Performance Measurement Survey is an annual survey of fund level cash flows and valuations collected from UK Private Capital members and represents the largest primary research survey of its kind in the UK. It shows that over a 10-year horizon until the end of 2025, UK private capital funds delivered an internal rate of return of 15.8% p.a. compared to 8.4% p.a. for the FTSE All share and 10.2% p.a. for the MSCI Europe Index.

Private equity and venture capital funds collectively outperformed the FTSE All Share Index and MSCI Europe Index over a 10-year horizon, demonstrating private capital’s resilience and commitment to investing for the long term and generating returns for investors.
 

The ten-year horizon IRR figure gives a reliable picture of the overall performance of the industry capturing the intended investment period and potential value creation over multiple years.
 

2025 saw one-year returns improve

UK managed PE and VC funds generated returns of 9.5% in 2025, representing a significant increase on 2024 when one-year returns were 2.1%. Public markets, by contrast, delivered strong short-term returns in 2025, particularly in equities driven by technology and AI.

One-year horizon returns should be interpreted with caution as these figures are not a realistic representation of private equity and venture capital performance, since it is typically not possible to invest in private capital funds for just a year. However, the one-year return is a useful indicator of the economic conditions in a particular year.
 

Benchmarking analysis

UK Private Capital analysis of private capital vintages since 2006 shows that the industry consistently outperforms public markets, doing so across all suitably mature vintages in the data set with the exception of 2006, 2019, 2020 and 2021.

UK Private Capital uses a Public Market Equivalent (PME) analysis to benchmark the industry against public stock markets. This is because it accounts for when money is invested and returned, replicating the investment patterns of private market funds with listed indices. This supports a more rigorous like-for-like comparison than can be achieved from other commonly used methods of comparison.  

With private capital expected to be an increasing location for pension fund investments, UK Private Capital’s latest data confirms that PE and VC consistently generate returns for investors and would support the retirement income of pensions savers as well as providing an additional source of diversification.
 

Note: The output of the analysis using the KS-PME approach is shown above – with figures greater than 1 indicating that the private equity and venture capital funds in the dataset have collectively outperformed the benchmark index. The report also includes another PME methodology, PME+, which shows similar results. The FTSE All-Share and MSCI Europe indices were selected for comparison because of their similar range of investment sizes, sectors and geographies.

The report also provides extensive metrics that fund managers investment professionals use to assess performance of the industry, including internal rates of return (IRR) and two types of multiple of capital (Distributed to Paid In, or DPI and Total Value to Paid in, or TVPI). UK Private Capital advises that it is important to consider all metrics together to get a full understanding of fund performance as investors rarely focus on a single metric.
 

“Our Performance Measurement Survey, which is the largest primary research survey of its kind in the UK, shows that private equity and venture capital deliver strong returns - consistently outperforming public markets over the long-term.

“It proves that private equity and venture capital should be a compelling option for long-term investors like pension funds by providing strong returns while having the added benefit of supporting 13,000 businesses across the UK.”

Michael Moore

Chief Executive, UK Private Capital

Notes to Editors:  

For further information, please contact:  
UK Private Capital Press Office 
Email: [email protected]

A full copy of the UK Private Capital Performance Measurement Survey report can be found here.

The accompanying methodology paper can be found here and the datapack here.

UK Private Capital advises that it is important to consider all metrics together to get a full understanding of fund performance as investors rarely focus on a single metric.
 

Background:

About UK Private Capital

UK Private Capital is the industry body and public policy advocate for the private equity (PE), venture capital (VC) and private credit ecosystem in the UK. With a membership of 600 firms, we represent UK-based private capital firms, as well as their professional advisers and a large base of UK and global investors. The private equity, venture capital and private credit industry has a vital role to play in driving national and regional growth. Currently over 13,000 companies, employing more than 2.5 million people, are backed by private capital investment in the UK.