2. PEU and BMU Benchmarks

This product suite provides index series that combines the performance of a large number of private companies globally to reflect the overall, segment-wise, and regional performance of the private asset class in a precise, granular, and frequent manner while avoiding the usual biases of estimated, appraised, or self-reported data commonly part of other private market benchmarks.

Different from the flagship market indices, i.e., the private2000 and private3000, the PEU and BMU Benchmarks offer more permutations and combinations of indices. While the flagship indices provide a succinct and representative summary of the performance of aggregate private markets, the PEU and BMU Benchmarks provide more customised and granular combinations of assets that are relevant to benchmarking any specific portfolio or funds. In other words, these indices allow one to select a segment or group of companies that can be directly relevant to one’s portfolio.

Specifically, the PEU (and BMU) Benchmarks are the result of several hundreds of combinations of the PECCS™ classification, geographic regions, and styles of private companies, built from the expanded coverage of all the private companies in the PEU Universe (BMU Universe). The PEU Universe consists of companies whose size distribution and profit profiles match those of private market transactions, while BMU Universe includes all eligible private companies (PEU & BMU determination description).

The key difference between PEU and BMU relies on what universe of companies are used. BMU is ideal for understanding the performance of key segments in private markets while PEU allows focusing on the usual companies that interest PE investors as their size and profit profiles are more in sync with PE-style investments.

On this page, we provide details on how we arrive at the list of eligible companies that can be included in the index and the actual determination of the PEU and BMU Benchmarks.

Note that in these indices, the number of constituents, entrants, and exits are not strictly monitored as for the flagship Market Indices.

Key specifications of the PEU and BMU Benchmarks are provided below:

When is a PEU or BMU Benchmark created?

If the combination of filtering criteria including regions, countries, and PECCS™ classes and subclasses in the PEU results in over 10 companies in any month and has a rolling average in a one-year window of over 25 companies, then a PEU and a corresponding BMU Benchmark are created.

How is a PEU and BMU Benchmark maintained?

Maintenance of these indices includes exclusion of companies whose financials become stale, lose eligibility to be classified under the segment of the index (for example, startup companies can evolve into mature at some time), and exclusion of bankrupt companies and those that are publicly listed. These are done on an ongoing basis, and the index is recomputed with the remaining constituents and any that newly qualify for the segments. There are no annual reconstitutions for these Benchmarks, and no region or country, or PECCS™ segment receives any pre-defined weights for index inclusion.

Other Kinds of Benchmarks

Benchmarks are not just constrained to combinations of two or more segments but also can include combinations of PEU, BMU, and market indices with different weights according to the needs and exposures of a user’s portfolio, to get a more bespoke reference point.

For illustration, consider an investor who is invested in the United States and the United Kingdom, with exposure to three industrial activities. Further, in the Information & Communication activity, the investor has selected investments based on the lifecycle phase in each of the two countries. This investor can combine the below indices and benchmarks as per the weights of their portfolio to produce a unique custom benchmark. The relevant indices/benchmarks and their weights in the custom benchmark for this investor are presented in the table.

Each of the privateMetrics® market indices or benchmarks also comes with a wealth of analytics allowing users to understand the drivers of risk and performance, extreme risk, concentration, key risk factors, etc., of the index or benchmark.