Brad --

Many thanks for the challenge and for reading! Have got to return the favor though. I'm not really sure the question you have raised has the same level of essentiality that you do, at least within the frame I am using. I'm also not sure the evidence you've offered supports your conclusion.

That's not because I think fees or risk-adjusted returns are irrelevant -- far from it! Both are a very big deal, and it's not my intent to argue that private equity investments are always and everywhere a good idea. My point is the inverse: PE investments are not never and nowhere a good idea.

The survey you've linked is interesting, but to my eye you're somewhat using a sharpe ratio as a blunt object. To what degree does it reflect the global experience? Can we draw existential conclusions about the asset class from the experience of 200 Defined Benefit plans in the US?

At first blush, sure. The statistics that you've offered are generated based on 3200 investor-years of experience. But they are specific experiences: defined benefit pension plans. There are questions about whether the entities managing these plans are fit for mission, so it's not clear to me whether it's more natural to draw conclusions about implementation or performance from this. Of course, issues with both exist. We could also talk about timeframe and what the world looks like if the dollar is not your reference currency.

Definitely there are matters of opinion here, but I'd suggest a more nuanced approach in weighing the evidence I've offered. I think it significantly affects the rationale for private investments in some countries that liquid indices do not capture a large percentage of businesses there, for instance. The local situation in Nigeria, Peru, or Columbia may indeed be completely irrelevant to aggregate-level statistics, but for investors active in those countries it might be more important to know.

Cheers, all the best, and thanks for reading --

Will