TLDR:
- Senior debt funds had the highest annual return in 2023, while real estate and VC funds suffered losses.
- Infrastructure funds performed well, with a 7.8% annual return, while real estate struggled with a 5.9% loss.
Senior debt funds outperformed major private asset classes in 2023, with an internal rate of return of 11.2 percent, according to MSCI. Mezzanine debt funds followed closely behind with a 10 percent return. In contrast, real estate funds recorded a significant loss of 5.9 percent, with venture capital funds also facing a 2 percent loss for the year.
Infrastructure funds topped the table among private real asset funds, achieving a 7.8 percent annual return. In contrast, natural resources funds finished as a distant runner-up with a 2.2 percent return. Infrastructure continued to show momentum in the last three months of 2023, returning 3.8 percent on a quarterly basis, while real estate and natural resources experienced losses of 2.5 percent and 0.8 percent respectively for the period.
Among private equity funds, buyout vehicles had the highest annual return at 9.1 percent, with expansion capital strategies producing a 4.1 percent return. However, private equity funds overall had a slow pace of distributions in 2023, with a full-year distribution rate of 9.5 percent, below previous years’ averages. The study was based on data from the Burgiss Manager Universe, covering over 13,000 private asset funds representing $15 trillion in investments across various sectors.
Global real estate funds faced losses in 2023, attributed to a year of anaemic capital-raising for the asset class. Investment managers raised $129 billion in new capital for non-listed real estate, representing a 51 percent drop from the previous year. This was the lowest level since 2016, according to findings from the 2024 Capital Raising Survey by the Asian Association for Investors in Non-Listed Real Estate Vehicles. Similarly, global private real estate fundraising in 2023 suffered its sharpest drop in 14 years, tumbling 33.1 percent to $151.3 billion, as reported in a State of the Market report by Realfin.
