historical returns to private equity as reported in the Venture Economics database. As noted earlier, this information has serious limitations, but it is among the best available. We show the internal rate of return that was reported by partnership investment vehicles. In order to deal with the problem of lagged valuations, we break out liquidated partnerships separately from unliquidated partnerships. Liquidated partnerships have exited all of their investments and distributed the proceeds to the investors; these funds were formed mostly between 1980 and 1994. Unliquidated partnerships still have some amount of investments contained in the partnership vehicle, and so the reported IRR depends in part on the valuation determined by the general partners. These funds were formed mostly in the 1990s. It is clear that these partnerships, whether liquidated or unliquidated, have a strong central tendency, with a median value near 10 percent (after fund fees and carried interest have been accounted for). This is very close to the long-term return of the S&P 500, and suggests that private equity as a class probably does not have significant long-term, aggregate returns in excess of public equity-although, as noted earlier, individual private equity managers may have such returns. It is also clear that there is a high degree of dispersion among private equity funds in terms of their reported IRRs. The top quartile of private equity funds is located near 20 percent; the bottom quartile is near 0 percent. This dispersion is quite large compared to results for public asset classes. It is often suggested that the two major kinds of private equity funds-venture and buyout, broadly construed-may have different returns. In any given year this is almost certainly true, but in the aggregate, over time, this appears not to be the case. If we look at the data for liquidated funds from the Venture Economics database, we can see that in the aggregate the distribution of reported returns is roughly similar (see Table 28.2), given the high degree of dispersion and the limited amount of data. In each case, the median return is near 10 percent, but the range between upper-quartile and bottom-quartile funds is near 15 percent. All of the liquidated funds analyzed here were formed before the stock price bubble of 1998-2000. As more funds are liquidated we may find that the history of TABLE 28.1 Historical Returns to Private Equity     U.S. Liquidated U.S. Unliquidated Europe Liquidated Europe Unliquidated Sample size Maximum 345 243.9% 1,178 726.2% 84 107.9% 580 265.5% Upper decile 26.5% 45.6% 21.7% 30.7% Upper quartile Median 17.7% 10.1% 19.8% 5.8% 13.4% 5.6% 16.0% 4.9% Lower quartile 2.6% -5.2% -1.1% 0.0% Minimum Standard error -72.6% 1.2 -100.0% 1.4 -43.5% 2.1 -100.0% 1.3 Data source: Thomson Venture Economics.