FORTUNE — David Rubenstein, co-founder of The Carlyle Group (CG), said during an earnings call today that private equity investors have lower return expectations today than they have over the past three decades. Nonetheless, fundraising itself is on a mild upswing.
“People used to expect 20% net internal rates of return (IRRs) or higher,” Rubenstein said, citing factors like better GDP growth and less competition. “Now investors are happy in the high to mid-teens, because the alternatives are so much less attractive.”
Need evidence? Try this:
The Carlyle Group reports an aggregate 21% net IRR for all of its fully-invested funds, but just an 18% net IRR for its active funds. Despite this dip from the 20’s into the teens, Carlyle managed to raise a whopping $2.4 billion in new private equity funds (including $2 billion for its sixth North American buyout fund, which is targeting a total of $10 billion).
It’s worth noting, however, that Rubenstein is speaking for the higher stratospheres of private equity performance. Overall, Cambridge Associates reports that 10-year to 25-year return benchmarks for U.S. private equity only come in between 12.5% and 14%, while 3-year return benchmarks outperform a bit at 18.3% (thanks, in part, to distressed buying during the financial crisis).
In terms of who’s buying into private equity funds, Rubenstein added that Carlyle’s limited partner base has evolved from two-thirds U.S. into a fairly even split between U.S. and foreign investors.
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