Oxford Professor Questions Private Equity Return Metrics as Industry Faces Transparency Pressure

Oxford Professor Questions Private Equity Return Metrics as Industry Faces Transparency Pressure

Marc Rubinstein, host of the Net Interest podcast, interviewed Ludovic Phalippou on February 3rd to discuss how private equity returns are measured—a conversation that arrives as CFOs increasingly scrutinize whether their pension allocations to PE justify the fees and liquidity lockup.

Phalippou, a Professor of Financial Economics at Oxford University's Saïd Business School, specializes in private equity and asset management. The timing matters: as more corporate treasury teams weigh private market allocations, the technical mechanics of how PE firms calculate and report returns have moved from academic curiosity to fiduciary necessity.

The interview, released as part of Rubinstein's Net Interest Extra series, marks the latest in a string of conversations examining structural questions in finance. Recent episodes have tackled passive investing dynamics with Michael Green (January 20th) and US banking trends with John McDonald and Brian Foran (February 17th), suggesting a broader editorial focus on market plumbing rather than market predictions.

For finance leaders, the Phalippou conversation hits a practical nerve. Private equity has become a standard component of corporate pension portfolios, but the opacity of return calculations creates an asymmetry: PE general partners control the valuation marks, the timing of cash flow reporting, and the benchmarks against which performance gets measured. CFOs approving these allocations often rely on consultant reports that themselves depend on GP-provided data.

The interview format—a 50-minute audio conversation—reflects how technical finance topics increasingly live in podcast form rather than traditional research notes. Phalippou has built a reputation for forensic analysis of PE return data, making him a natural subject for an audience that needs to understand not just what returns are reported, but how those numbers get constructed in the first place.

What the conversation likely explores (based on Phalippou's body of work, though the paywalled content prevents confirmation) is the gap between reported Internal Rates of Return and actual cash-on-cash multiples, the treatment of management fees in performance calculations, and whether public market equivalents provide genuine apples-to-apples comparisons. These aren't abstract questions—they're the difference between a pension fund that's genuinely outperforming and one that's paying 2-and-20 for index-like returns with a 10-year lockup.

The podcast is available only to paid subscribers of Net Interest, Rubinstein's Substack publication focused on financial system mechanics. The paywall itself is notable: serious institutional analysis has migrated from sell-side research (free but conflicted) to independent subscription models where the business model is reader value rather than deal flow.

For CFOs evaluating private market allocations, the key question isn't whether private equity can generate alpha—it's whether the reported returns accurately reflect the risk-adjusted, fee-adjusted, liquidity-adjusted reality. That's a measurement problem, and measurement problems in finance have a way of mattering more than anyone expects until they suddenly matter very much indeed.

The interview joins a growing library of Net Interest conversations examining structural finance topics, from blockchain infrastructure (John Andrews, September 2025) to private credit growth (Huw van Steenis, August 2025). The through-line: understanding how money actually moves matters more than predicting where it will move next.