(December 15, 2011) — In response to a recent paper that claimed that the Thomson VentureXpert (TVE) database — which has been used for over two decades by practitioners and academics to benchmark and judge the performance of private equity and venture capital — may be seriously flawed, the creators of the database are strongly refuting the claims.
“Thomson Reuters refutes the key messages articulated in the research report recently published by Rudiger Stucke…At no point did Dr. Stucke engage with Thomson Reuters to establish some of the basic facts which appear to underline the report,” Leon Saunders Calvert, Thomson Reuters Head of Global Deals & Private Equity, told aiCIO in an email.
According to the paper by Rüdiger Stucke at the University of Oxford, a closer look at aggregated and individual figures revealed severe anomalies in the underlying data which are the result of ceasing data updates. “Since existing errors have a systematic and persistent character, they do not just increase noise but result in a significant downward bias of presented performances. Consequently, many empirical results established using this database may not be replicable with correct data. In particular, the claim that private equity has not outperformed public equity is unlikely to hold with true numbers,” the paper asserted.
“It is going to shake up the industry,” James Bachman of The Burgiss Group, whose client list includes over 300 asset owners that represent in excess of $1 trillion in private capital commitments, told aiCIO earlier this month, referring to the study.
While Stucke’s research report sheds doubt on the accuracy of Thomson Reuters’ popular database, Calvert continued to thwart the merit of such assertions: “In line with its confidentiality obligations, Thomson Reuters did not share any underlying cashflow data with Dr. Stucke, which implies that a good deal of his analysis must, by definition, have been based on assumptions that are not precisely described in his research paper. Dr Stucke’s claim that 47% of the funds in the Thomson Reuters private equity performance sample are stale is unsustainable. Furthermore, there is a suggestion in the report that the Thomson Reuters product has experienced some kind of mechanical error leading to an increase in stale funds in the sample. This is patently false. Thomson Reuters is committed to servicing the private equity industry and indeed working with practitioners, industry bodies and academics to ensure we continue to reflect market realities, especially during these challenging market conditions.”