What does the 'vintage year' signify in private equity?

The 'vintage year' in private equity refers specifically to the year a fund begins its investment cycle. This year acts as a pivotal marker for evaluating the performance and overall success of the fund. When assessing a private equity fund, the vintage year is essential as it helps in comparing returns across funds launched in the same time period. This provides investors with a clear framework to understand how various economic conditions might have impacted the fund's performance over time.

In the context of private equity, the performance evaluation often considers the time when the investments are made; hence, the vintage is critical for benchmarks, returns, and measuring market cycles. Understanding the vintage year enables investors to gauge not only the immediate success of a fund but also its performance relative to funds launched in similar market environments.