News & Analysis

Senior debt funds show return longevity

Research from Burgiss shows that senior debt funds garner strong returns at the 10-year mark, but still lag behind private equity.

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Senior debt funds age like fine wine, according to data from Burgiss, a private capital data and analytics company.

Burgiss data found that, on average, senior debt funds generated strong double-digit returns at the 10-year mark. They garnered a pooled 10-year internal return rate of 13.32 percent, net of fees, compared with the five-year average of 6.29 percent.

Private equity buyout funds, on average, grew their IRR from the five-year average of 12.15 percent to 14.94 percent at the 10-year mark.

Senior debt funds closed on more than $59.21 billion in 2018, according to PDI data. The strategy has raked in $30 billion so far in 2019.