Data sourced from Dakota Private Markets, the private fund performance platform powered by Dakota. Learn More | Request Access
A 2007 vintage buyout fund and a 2016 vintage buyout fund carry the same asset class label and very different outcomes. The same is true of private credit. An LP reading performance across two decades is really reading several different markets stacked on top of each other, and the useful question is what drove returns in each period.
Private equity: how performance is driven
Private equity returns come from three places: earnings growth in the portfolio company, change in the valuation multiple between entry and exit, and leverage. Operational improvement gets the most attention in pitch decks, but over long stretches the cycle has done much of the work. Cash comes back late and mostly at exit, so DPI trails TVPI for years, and the timing of exits matters as much as the quality of the companies.
Private equity: how it has evolved
The earliest vintages in Dakota Private Markets, 2004 through 2007, produced median net IRRs between 7.1% and 8.6%. Vintages from 2009 onward look different. Medians held between 12.2% and 15.6% through 2020, peaking with the 2016 vintage at 15.6%, as falling rates, cheap debt, and rising multiples worked in managers’ favor. The 2021 vintage broke the pattern at 10.1%, the weakest median since the crisis era, which fits capital deployed at peak pricing and then met by higher rates and a slower exit market. Dispersion has stayed wide throughout, with roughly 9 to 12 points between top and bottom quartile in most vintages. Vintages from 2023 forward are still too young to read with confidence.
Private credit: how performance is driven
Private credit returns come mainly from contractual yield: a base rate plus a spread, plus fees and original issue discount. Most of the return is earned through current income, so distributions start early and recur, and the J-curve is shallower. Upside is capped by the loan terms, which moves the main risk from missing a big exit to losing principal through defaults and recoveries.
Private credit: how it has evolved
Private credit is the younger market, and the early vintages show it. The 2004 through 2009 cohorts contain a smaller amount of constituents, so treat those medians as directional. From 2010 forward the sample is meaningful, and the pattern is clearer. Medians sagged to a low of 5.7% for the 2013 vintage, then climbed to 10.6% for 2018 as direct lenders scaled up after bank retrenchment. The 2022 vintage posted an 11.8% median, the highest since the 2008 vintage, as higher base rates lifted floating rate yields. Dispersion is the bigger story: top to bottom quartile spreads in recent vintages run around 5 points, roughly half of what private equity shows.
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Vintage grouping
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PE median net IRR range
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PC median net IRR range
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2004 to 2007
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7.1% to 8.6%
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5.2% to 8.8%
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2008 to 2014
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10.1% to 13.3%
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5.7% to 13.1%
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2015 to 2020
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13.7% to 15.6%
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7.4% to 10.6%
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2021 to 2024
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9.1% to 14.4%
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9.4% to 11.8%
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Bottom line: Private equity performance has followed the cycle of rates, multiples, and exits, while private credit performance has followed the cycle of spreads, competition, and defaults. The averages hide the vintage, and the vintage is where the story is.
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