Private Equity Can’t Top Public Markets, Even Without Mag 7

A new report reveals private equity underperformed public markets over the past five years, even excluding the outsize gains of the Magnificent 7 tech stocks. Investors in private equity funds would have earned higher returns by simply holding diversified public market portfolios, challenging the long-held assumption of private equity’s superiority. The analysis spans 2021–2026, a period marked by volatility, rising interest rates, and shifting economic conditions that favored liquid public assets over illiquid private holdings. Public equities delivered stronger risk-adjusted returns, with broader market resilience offsetting the absence of mega-cap tech growth, traditionally a key driver of private equity’s appeal. The findings question private equity’s fee structures and illiquidity premium, as institutional investors reassess allocations amid persistent underperformance relative to public benchmarks.