Investors have not “missed the boat” when it comes to listed private equity in spite of narrowing discounts, according to Winterflood Securities.

The latest report from the firm has revealed that discounts at which private equity trust shares trade tightened from 36 per cent to 30 per cent in the past year. This compares to the sector’s discount nadir at 60 per cent in September 2008, Winterflood said.

But Simon Elliott, head of research at Winterflood Securities, warned the “real issue” for the sector is “that a 30 per cent discount level feels like the new default level – in marked contrast to the pattern before 2008”.

He said: “Private equity remains a high risk, high return asset class, sensitive to economic downturns. Should there be another financial crisis brought on by the failure of the euro, private equity is likely to be hit hard.

“However, this is the worst case imaginable and in the event that economic conditions improve, we would expect the asset class to perform well.”

The majority of listed private equity funds have outperformed in the first half of 2012, with only six funds underperforming the FTSE All Share index so far this year, including two that have delivered negative returns, Winterflood said.

“The strongest performers were those that were looking to realise their portfolios and return capital to shareholders such as Henderson Private Equity and Northern Investors,” Mr Elliott said.

“The best performer year to date is SVG Capital, followed by Aberdeen Private Equity and 3i Group.”

SVG Capital is a highly concentrated portfolio, with its top 10 holdings accounting for 97 per cent of net assets, Winterflood said.

According to its interim management statement released on August 10, however, the fund plans to move from a single manager fund of funds structure to “a vehicle offering balanced, single point exposure to private equity”.

This, according to SVG, will involve making commitments to a limited number of private equity managers focused on management buyouts.

Meanwhile, Candover Investments and JPM Private Equity have both struggled in the first half of the year, the former seeing its net asset value (NAV) fall by 10 per cent from 717p at the end of 2011 to 642p at the end of June 2012.

Mr Elliot said: “Candover Investments continues to be one of the worst performing listed private equity funds with a discount of nearly 50 per cent to its latest NAV.

“This discount reflects a disappointing NAV performance but also the lack of certainty over the timing of any return of cash to shareholders.”