Both fund types underperformed the public markets during the first quarter but continued to generate significantly greater returns than the public markets over the longest time horizons measured by the benchmarks.
The private equity index benefited from solid public market returns and rising commodity prices, which boosted company-level performance. Venture capital returns were aided in large part by an improving exit environment and continued enthusiasm for technology, the index's largest sector by weight. Both fund classes generated lower returns for the first quarter than they did in the quarter prior. Private equity funds earned 5.4% for the quarter, vs. 7.6% in the final quarter of 2010; venture capital earned 5.0%, vs. 8.4% for the prior quarter.
Over the 10-year period ending March 31, private equity funds earned 10.8% and venture capital -0.1%. The 10.9% spread between these returns was almost a full point less (down from 11.7%) than the prior quarter. The venture capital return for the period, while negative, was up sharply from the -2.0% return for the same length period ending December 31, 2010, and it was a full 4.5% improvement over the low point for the 10-year venture capital return, which was reached during the quarter ending September 30, 2010.