Oxford Professor Questions Private Equity Return Metrics as Asset Class Faces Scrutiny

Oxford Professor Questions Private Equity Return Metrics as Asset Class 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 the thorny question of how to accurately measure private equity returns—a conversation that arrives as CFOs and institutional investors grapple with unprecedented allocations to the asset class.

The interview, published February 3 as part of Rubinstein's Net Interest Extra podcast series, comes at a moment when finance chiefs are under pressure to justify their private equity commitments amid questions about fee structures, liquidity constraints, and whether the asset class truly delivers the outperformance it promises. For CFOs managing corporate pension funds or treasury investments, the question of whether private equity returns are being measured correctly isn't academic—it's a matter of fiduciary duty.

Phalippou has built a career specializing in private equity and asset management, authoring research that has challenged conventional wisdom about the asset class's performance. His work at Oxford focuses on the methodologies used to calculate returns in private markets, where the absence of daily pricing and the complexity of cash flow timing create measurement challenges that don't exist in public equities.

The timing of the conversation is notable. As of early 2026, private equity firms are sitting on record amounts of uninvested capital while exit markets remain challenging, creating a mismatch between the returns promised to limited partners and the reality of distributions. CFOs who have committed capital to private equity funds are finding themselves in an uncomfortable position: locked into long-term investments with limited visibility into how their returns stack up against public market alternatives.

The measurement question matters because it affects everything from asset allocation decisions to compensation structures. If private equity returns are overstated due to flawed methodologies—whether through the treatment of unrealized gains, the timing of cash flows, or the comparison to public market benchmarks—then finance leaders may be making strategic errors in how they deploy capital.

Rubinstein, who has covered financial markets for years and now publishes the Net Interest newsletter, has made a practice of interviewing experts who can illuminate the mechanics behind major asset classes. His conversation with Phalippou represents the latest in a series that has included discussions on passive investing, private credit, and blockchain technology.

For CFOs, the key question emerging from this discussion is whether the tools they're using to evaluate private equity performance—internal rate of return calculations, public market equivalent analyses, and benchmarking studies—are giving them an accurate picture of risk-adjusted returns. As private equity continues to demand larger slices of institutional portfolios, getting the measurement right has moved from a technical concern to a strategic imperative.

The full interview is available to subscribers of Rubinstein's Net Interest Extra series, which has become required listening for finance professionals trying to understand the structural shifts reshaping capital markets.