Private equity clocked up a return of more than 6.5 per cent in the US last year.

A barometer of returns from private equity funds collectively holding more than $2 trillion of investments showed that on average the asset class in the US clocked up a 6.55 per cent return last year, with European funds doing better, at 7.1 per cent, and rest of the world (such as Asia), at 5.88 per cent.

The figures, from State Street's GX Private Equity Index, measure internal rate or return. The index is the pooled IRR across the approximately 2,500 private equity funds within State Street's scope. The IRR is computed for the quarter using daily net cash flows as well as the valuations as of the beginning and end of the quarter.

“Private equity funds posted a modest recovery in the fourth quarter after a brief drop in the previous quarter,” said Will Kinlaw, senior managing director and global head of State Street Associates, part of State Street Global Exchange.

“Overall we have seen relatively steady performance in private equity investments for the past few years. The biggest driver in the fourth quarter rebound was the continued trend of impressive growth by venture capital funds, which haven’t posted a negative return since 2012,” he said.

The returns last year contrasted with losses in both the S&P 500 index of US equities and the Russell 3000 index. 

European-focused private equity funds recorded a return of 1.94 per cent in the fourth quarter against a relatively fragile economic backdrop. Private equity funds outside of the US and Europe, primarily made up of emerging market funds, had a quarterly performance of 3.63 per cent in Q4 2015, up from -3.13 per cent in Q3.