Cambridge: PE & VC ride out a tough second half of 2014

Both asset classes posted positive returns through the 3Q of the year despite headwinds

Returns on U.S. private equity and venture capital funds in the Cambridge Associates U.S. Private Equity Index remained positive for the quarter ending September 30, 2014. However, the numbers represent a slight decline from second-quarter totals, according to the latest performance data released by Cambridge Associates.

Venture capital outpaced private equity owing to stronger valuations and a healthy IPO market, posting returns of 2.4 percent for the quarter, over private equity's 1.7 percent. 

For the year through September 30, 2014, returns on the Cambridge Associates U.S. Private Equity Index were pretty equally matched with venture capital returning 10.8 percent, and private equity returning 10.2 percent. Both outpaced the S&P500 and the Russell 2000 indexes.

Despite these positive numbers, a deeper dive shows a bit of trouble in private equity. According to the report, the third quarter return of 1.7 percent for the private equity index was substantially lower than its 5.7 percent return in the previous quarter.

During the third quarter, fund managers called just $19.6 billion of capital – a 17.5 percent decrease from the previous quarter. LP distributions were also down 6.2 percent, totaling 35.9 billion.