Just how bad has the financial crisis been for investors in private equity? The industry suffered -24% investment rates of return on a 12-month basis as of June 2009, says London-based research firm Preqin.

Preqin holds net-to-limited partner performance data for over 4,900 private equity funds of all types and geographic focus, representing in aggregate value 65% of all capital ever raised.

The story began to go pear-shaped in 2008. The previous year, 2007, saw the asset class enjoy a 26% one-year IRR. By September 2008, before Lehman Brothers' collapse, the asset class had lost -11% on a 12-month basis. By March 2009, the 12-month IRR had fallen to -30%.

But already the industry was on the mend, as the latest available figures, June 2009, show.

Preqin notes that, despite economies of scale, performance in the buyout industry has been dreadful, losing -28%. Its size within the private equity world has skewed the industry average for the worse. Funds of PE funds also did poorly, down -19.4% for the period. Venture funds outpaced the buyout funds and, as of June, their one-year IRR stands at -16%. Mezzanine and distressed private equity lost the least, -14%.

Whether the figure is -14% or -24%, it's all pretty grim for private equity LPs on a 12-month basis. However, the success of the asset class in the medium term has enabled it to post positive figures on three- and five-year bases.

Preqin calculates on a three-year basis, the IRR to June is 2.1%, while on a five-year basis it is 18.9%.

How does this compare to public markets? On a one-year basis ending June, the S&P 500 was down -26.2%, the MSCI Europe fell -34.1% and the MSCI Emerging Markets index dropped by -27.8%. So a loss of -24% is not quite so awful in context.

On three- and five-year comparisons, private equity has done better. Its three-year 2.1% gain is pretty modest, considering the fees, but the S&P 500 was down -8.2% for that period. The comparison improves with age: PE lodged 18.9% over five years, while the S&P500 lost -2.2%.

Whether this comparison is actually that valid is debatable. Private equity is illiquid and long-term by nature, so how it does in any given three or five-year period against public markets doesn't matter to an LP, which would have invested in private equity based on specific expectations of returns and risk.

On the other hand, the comparison has become necessary because of the introduction of mark-to-market portfolio valuations in the United States as of the end of 2008. Preqin believes current trends point to the asset class showing much healthier results for the third quarter of 2009.