Nomura has launched the Nomura QES Modelled Private Equity Returns Index (PERI) in the US, the first daily investible index for institutional investors which targets returns similar to those achieved through investment in private equity buyout funds on a committed capital basis.
The PERI has been developed in collaboration with sub-adviser and quantitative think tank Quantitative Equity Strategies (QES) and uses data provided by Preqin.
The PERI does not invest in buyout funds directly or indirectly but has been developed on a foundation of private equity research which suggests that a substantial portion of private equity buyout fund returns can be attained through an investment in the “public market equivalents” of the private investments made by those funds. The PERI implements this theory through a QES developed systematic model which uses financial algorithms, in large part underpinned by private equity industry data from Preqin, to allocate on a weekly basis to these public market equivalents.
The PERI is a daily investible, long only index that targets global private equity like returns but on a committed capital basis. The overall performance is intended to target both the returns of capital actually invested in the private equity buyout fund universe as well as a risk free rate of return on the proportion of capital awaiting deployment.
Exposure to the PERI is obtained exclusively via Nomura, which is able to offer a variety of structured products on the index.
Samir Patel, co-head of equities Americas, says: "The PERI addresses some of the traditional challenges facing private equity investors such as long lock-ups and uncertainty around cash flows. It can be especially useful in managing private equity allocations in investment portfolios."
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