Oxford Professor Questions Private Equity Return Metrics as CFOs Face Allocation Pressure
Marc Rubinstein's latest Net Interest podcast features Ludovic Phalippou, a Professor of Financial Economics at Oxford University's Saïd Business School, discussing how private equity returns are measured—a conversation arriving as finance chiefs navigate mounting pressure to justify alternative asset allocations.
The February 3rd interview focuses on Phalippou's research into private equity performance measurement, a topic that's become increasingly relevant as institutional investors pour capital into the asset class while facing questions about whether reported returns accurately reflect economic reality. For CFOs overseeing pension funds or corporate treasury allocations, the distinction between how PE firms report performance and what investors actually earn has direct implications for capital allocation decisions.
Phalippou specializes in private equity and asset management research at Oxford, where his work examines the methodologies funds use to calculate and report returns to limited partners. The timing of the discussion is notable: as of early 2026, CFOs are being asked to approve larger PE allocations while simultaneously facing board-level scrutiny about whether these investments deliver the premium returns they promise over public markets.
The interview represents the 17th episode of Rubinstein's "Net Interest Extra" series, which brings finance industry experts into conversation about market structure issues. Rubinstein, who publishes detailed analysis of financial markets through his Substack newsletter, has previously hosted discussions on passive investing dynamics, blockchain technology adoption in traditional finance, and private credit market growth—all topics that intersect with corporate finance decision-making.
What makes Phalippou's perspective particularly relevant for finance leaders is his academic position outside the private equity industry itself. While PE firms and their consultants typically present performance data in the most favorable light possible, independent researchers like Phalippou can examine the same datasets and ask whether the standard metrics—internal rates of return, multiples of invested capital—tell the complete story that CFOs need when comparing PE to other investment options.
The 50-minute conversation comes as finance chiefs face a practical dilemma: private equity firms are raising record amounts of capital and pitching CFOs on everything from direct co-investments to fund-of-funds structures, yet the opacity of PE performance measurement makes apples-to-apples comparisons with public market alternatives genuinely difficult. When a PE fund reports a 15% IRR, what does that actually mean for the cash flows a corporate pension plan will receive? How much of that return compensates for illiquidity versus representing true alpha?
These aren't abstract academic questions. They're the kind of thing that comes up in investment committee meetings when CFOs need to defend why they're locking up capital for a decade in a private fund rather than buying an index fund. The full interview is available to paid subscribers of Net Interest, suggesting Rubinstein's audience—likely sophisticated institutional investors and finance professionals—sees value in detailed discussions of alternative asset performance measurement.
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