Oxford Professor Questions Private Equity Performance Metrics as Industry Faces Scrutiny

Oxford Professor Questions Private Equity Performance Metrics as Industry Faces Scrutiny

Ludovic Phalippou, a Professor of Financial Economics at Oxford University's Saïd Business School, sat down with finance writer Marc Rubinstein this month to discuss his research on private equity returns—a conversation arriving as CFOs and institutional investors grapple with how to accurately measure performance in an asset class that now manages trillions in capital.

The interview, published February 3rd as part of Rubinstein's Net Interest Extra podcast series, comes at a moment when private equity's opacity around performance measurement has drawn increased attention from regulators and limited partners alike. For finance leaders evaluating PE investments or considering partnerships with private equity firms, the discussion touches on fundamental questions about how returns are calculated and reported.

Phalippou specializes in private equity and asset management research at Oxford, where his work has focused on the methodologies used to assess private market performance. The timing of this conversation is notable: as public market volatility has driven more institutional capital toward alternative investments, the question of whether private equity actually delivers the returns it advertises has moved from academic journals to boardroom debates.

The podcast episode runs approximately 50 minutes and is available to paid subscribers of Net Interest, Rubinstein's finance-focused publication. Rubinstein, who has built a following among institutional investors and finance professionals, has previously interviewed figures across banking, fintech, and asset management for the series.

For CFOs, the core issue Phalippou's research addresses is straightforward but consequential: when private equity firms report returns to investors, are those figures comparing apples to apples with public market alternatives? The question matters because many corporate pension funds, treasury departments, and institutional investors have dramatically increased their private equity allocations over the past decade, often based on historical performance data that may use different calculation methods than public equity benchmarks.

The interview format—a long-form conversation rather than a brief soundbite—suggests the complexity of the measurement issues at stake. Private equity returns involve cash flows that occur irregularly over years, making direct comparison with quarterly public market returns mathematically challenging. How those cash flows are weighted, when they're measured, and what benchmark they're compared against can dramatically alter the apparent performance.

This isn't merely an academic exercise. Finance leaders making allocation decisions need to understand whether private equity's reported outperformance reflects genuine alpha or simply artifacts of measurement methodology. The difference could amount to billions in misallocated capital across institutional portfolios.

The conversation also arrives as private equity firms face pressure to improve transparency around fees, performance calculations, and the actual net returns delivered to limited partners after all costs. Several large pension funds have begun publishing detailed analyses of their private equity performance, sometimes revealing results that fall short of the industry's marketed returns.

What remains unclear from the podcast announcement is whether Phalippou's latest findings suggest private equity performance is better, worse, or simply different than commonly reported. That ambiguity itself may be the point: for an asset class that has largely operated outside the rigorous performance standards applied to public markets, even asking the right questions represents progress.