medium · Private Equity pe-core
An institutional investor calculates the Public Market Equivalent (PME) for a private equity fund and arrives at a value of 0.92.
What is the most accurate interpretation of this metric?
- The fund's internal rate of return sits at exactly 92% of its stated target IRR.
- The fund has returned 92% of the LPs' cumulative paid-in capital to date.
- The fund underperformed the public market index on a cash-flow-matched basis.
- The fund generated an 8% premium in returns over the chosen public market index.
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