Going for Gold: Assessing the Strongest Investment Strategies In Western Europe

Going for Gold: Assessing the Strongest Investment Strategies In Western Europe

With the eyes of the world on Paris for the Olympic Games, we wanted to identify the top–performing strategies in France’s geographic profile, Western Europe, and award some medals of our own. To best assess the overall performance of each strategy, the top-line performance along with underperformance and downside, we review the quartile benchmarks for the seven main investment styles in the region. 

Key Takeaways

Among the seven strategies there are three standouts: buyout, venture capital, and growth equity. At first glance, growth equity is the top performer with the highest upper fence at 22% (or the percent at which any fund above it could be considered an outlier within the dataset). Venture capital (VC) would appear second, but it has a higher top-quartile cutoff at 23%. This, paired with a better lower fence (denoting less downside risk) means we would place VC slightly ahead of growth equity for the gold medal in Western Europe.  

Buyout funds lack the top-level performance of the other two but make up for it with a third quartile breakpoint of 6.4%, much higher than VC and growth. This positions buyouts as having a bit less upside, but steady returns for at least three-quarters of funds in the region make it a clear case for the bronze medal. 

The other strategies take the benchmark pattern of buyouts a step further. Although they have considerably less upside from the top-performing quartile, they have a higher floor with all lower fences for these strategies falling above -10%. The sturdiness of these investments and the smaller spread of likely outcomes provide slightly more certainty to these strategies compared to the top performers. 

Looking Ahead

Although venture capital has won the gold, the changing macro-environment may have an outsized effect on the private markets in the years to come.  

With economic indicators such as inflation and the CPI normalizing over 2024 after the rockier preceding years, there may be a rising tide that lifts all strategies to healthier returns in the back half of the 2020s.