medium · Private Equity pe-core
An institutional LP is evaluating a private equity fund using the Kaplan-Schoar Public Market Equivalent (KS-PME) methodology.
If the KS-PME ratio is 1.15, what is the most accurate interpretation for the LP?
- The fund returned 1.15x its capital, or MoIC, irrespective of markets
- The fund underperformed the public market index since the ratio sits close to 1.0
- The fund's annualized IRR is exactly 15 percentage points higher than the public market's IRR
- The fund outperformed the public market index by 15% on a cash-flow-weighted basis.
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