Blackstone Group LP is in the final stretch of raising what would be the largest private-equity fund ever. Big funds, however, don’t necessarily translate into big returns, according to a Wall Street Journal commentary. The private-equity giant has capped its latest fund at around $25 billion amid strong demand. Collecting that would take the fund past the $24.6 billion record set by Apollo Global Management LLC in 2017. Others also are raising big funds: Advent International said earlier this month that it had raised a $17.5 billion fund, and software-focused Vista Equity Partners is raising a $16 billion vehicle. The rise of megafunds reflects the growing demand for private equity from large investors such as sovereign-wealth funds with hundreds of millions of dollars to put to work, according to the commentary. With interest rates still persistently low, the industry’s historical reputation for 20 percent-plus returns, is appealing — even if it means paying higher fees and having money locked up for long periods. The problem is that the largest funds haven’t always lived up to the hype. Taken together, private-equity funds of $10 billion or more posted 14.4 percent five-year annualized returns net of fees as of the end of last September, barely edging past the 14.1 percent return for the S&P 500, according to data from investment firm Cambridge Associates.
