Business & Finance
Private equity funds trail S&P 500 returns in recent years amid rising interest rates
Recent benchmarks show private equity underperforming public stock indexes over three- and five-year periods as policymakers consider broader retail access.
The short version
- Private equity indexes have significantly lagged the S&P 500 over recent three- and five-year periods, reversing a decade of outperformance that ended when interest rates rose in 2022.
- Federal regulators are considering proposals to expand access to private market assets in workplace 401(k) retirement plans following an executive order.
- Financial analysts emphasize that private equity entails higher management fees and reduced liquidity compared to conventional index funds.
- The timeline and final terms for proposed Department of Labor rules allowing private assets into retirement accounts remain unfinalized.
Key facts
- Cambridge Associates' Private Equity Index returned an annualized 7.4% net of fees over the three-year period ending in March, compared with 18.3% for an S&P 500 tracking fund over the same timeframe.[CNBC]
- Over the five-year period ending in March, the Cambridge Associates index posted a 9.3% annualized return against 12% for the S&P 500.[CNBC]
- Over a longer 25-year horizon ending in 2025, the private equity benchmark outperformed the S&P 500 with a 12.8% annualized return versus 10%.[CNBC]
- From October 2022 through March 2026, Bloomberg's private equity index trailed the S&P 500 by 18 percentage points following interest rate increases.[CNBC]
- In August 2025, President Donald Trump signed an executive order directing the SEC and Department of Labor to facilitate retail access to alternative assets in 401(k) plans.[CNBC]
What remains uncertain
- The final wording and implementation date of the Department of Labor's proposed rule to ease the addition of private market assets into workplace retirement plans remain undecided.[CNBC]