Private Equity Manager Selection Gains Importance as Return Gap Widens

Private equity manager selection remains critical for investors as wide differences in returns persist between the strongest and weakest-performing funds, according to research from private-markets platform Moonfare.

The annual return gap between top- and bottom-quartile private equity managers averaged 19.2 percentage points between 2016 and 2026, compared with just 2.9 percentage points for large-cap equities.

Past performance also provided limited certainty about future results. Two-thirds of top-quartile private equity managers failed to repeat their outperformance with their next fund, Moonfare said.

The research found that smaller funds could deliver more consistent top-quartile performance, while fund sizes above USD5bn did not eliminate performance dispersion.

Nevertheless, capital is becoming increasingly concentrated among larger managers.

PitchBook data showed funds of USD1bn or more captured 78.2% of private equity fundraising during the first half of 2026, up from 59.1% in 2021.