Very occasionally I pity the well-paid executives involved in London’s listed private equity sector. Among the many injustices imposed on them is the curse of what I call Big Picture Macro.

Put simply, you can do as many deals above net value (NAV) as you like, boast about earnings uplifts, and be activist with the register and yet still investors will trot out some big macro meme such as: ‘Private equity was the big beneficiary of near-zero interest rates, but higher-for-longer rips up the rule book doesn’t it?’

At which point I’m sure the besuited executive rolls their eyes and gently intones: ‘No one knows anything for certain about the future’.

Listed private equity is another one of those areas that London does very well at but gets no real credit for it. I’ve said it before and I’ll say it again, if you want to moan about high private equity fees, poor transparency and chronic illiquidity, then take a closer look at the listed PE funds on the London Stock Exchange. I’m not for one minute arguing that they are saintly, but they at least offer real-time pricing, much improved underlying asset level transparency and more competitive fees.

But there’s a hitch, as always, and that is persistent share price discounts. Despite many of the more enlightened funds pulling virtually every lever to hand, those wide gaps to NAV don’t look like budging from an average of nearly 28%.

Before we dive in, one note of caution. Not quite every listed PE fund is stuck in the deep discount hole. A few, such as 3i Group (III ), the £21bn backer of Europe’s most successful discount retailer, Action; and Literacy Capital (BOOK ), the £274m investor in small UK unquoted companies, either stand on a premium above NAV or at a single-digit discount below. It’s not quite in the listed PE funds’ DNA to languish well below asset value, but so many do that it’s easy to think the two go hand in hand.

Take Pantheon International (PIN ), for example. It’s a successful fund of funds that has I think done many of the right things. As a judge of the Association of Investment Companies’ shareholder communications awards, I can say it has really prioritised transparency, and just like peers such as Oakley Capital (OCI ) and HgCapital (HGT ) its reports and accounts are a model of clarity and explanation.

It’s worked hard to reach private and wealth-based investors. More importantly, its board has thought long and hard about capital allocation. Back in August, for example, Pantheon International announced a new capital allocation policy which committed to return £200m by the financial year to May 2024, as well as ongoing buybacks thereafter based on a proportion of net portfolio cash flow.

In practical terms that meant a reverse auction tender offer for up to £150m (6.2% of net assets), a price range of 280p to 315p, equivalent to a 39%-31.3% discount to the published NAV at the time according to analysts at Numis. Even after this transaction, the fund will have firepower for buybacks of £42.66m until May 2024.

Flash forward a few months and care to guess where the share price is. Drum roll please… 298.5p. And the discount? 37%. But it could be worse – HarbourVest Global Private Equity (HVPE ), another highly impressive fund of funds manager, is still trading on a seemingly intractable 42% discount after a £25m buyback.

And its also worth noting in passing that there is some evidence that the long-expected decline in underlying business valuations might – just might – have started to bottom out. Both these funds of funds, worth more than £3bn between them, put out recent numbers (for September) which showed small uplifts and declines (low single digits, driven in some cases by currency changes).

Single manager specialists such as Oakley Capital Investments and HgCapital are also struggling with persistent discounts, close to the top of their 10-year range. I rate both managers highly and they both boast superb long-term track records, but Oakley is still stuck at a 35% discount. HGT fares slightly better with a discount at 20%, but even that is well above its longer-term average of about 10%.

And this is despite evidence of recent transactions – HGT sold business software firm Silverfin at 20% above its book value. There are also rumours in the market that a deal on that firm’s acquirer, Visma, is on the cards imminently.

Now, to be fair, the sheer quantity of corporate transactions, and more importantly transactions not involving other PE firms and their funds, has decreased and thus those crucial portfolio mark-to-market valuation points are thin on the ground. But in performance terms, there’s clear evidence that many of the underlying portfolio firms, especially those involving businesses with a strong technology angle are outperforming the wider private equity market.

My two favourite anomaly stories, though, belong to slightly more unusual private equity/venture capital firms. Seraphim Space (SSIT ) sensibly decided to listen to their advisers and run a big buyback programme – big for Seraphim at least – and the share price shot up as a result.

The core problem here had been that many investors – me included – had real doubts about the true value of their underlying risky, early-stage space tech firms. A few months later, the share price has slumped back down again and is only a bit above the level at which those buybacks were announced.

In the meantime, the manager has reported a decent portfolio uplift in valuations with evidence growing that the space tech sector is avoiding the worst in the venture capital downturn. Investors, by contrast, don’t seem to be buying that story.

The other egregious example is Georgia Capital (CGEO) which is a big private equity player in the frontier market of Joseph Stalin’s home country, Georgia. I’m sure readers can work out all the risks involved with this fund for themselves, so I won’t labour those negatives but consider the positives. Year to date the NAV is up 21% with the shares advancing 28.6%, although that still leaves them 55% below asset value.

By contrast, Seraphim is on a 65% discount even after yesterday’s 14% leap on news of a crucial fund-raising by one of its portfolio companies.

My point here is that there is a deep disconnect at play here. Public market investors clearly don’t buy the story that their fund managers are telling them. You can run as many buybacks as you want, get your managers to buy as many shares as they can, show NAV uplifts, and even reveal a few carefully chosen transactions, and still investors aren’t buying the narrative.

My suspicion is that two forces are at work. The first is the curse of the Big Picture Macro. Investors won’t believe anything until they see a few years of fund returns in the new ‘Higher for Longer’ regime.

The other driver is I think even more concerning. Maybe the public markets aren’t the right venue for this kind of closed-end structure? Perhaps the rise of semi-liquid, gateable funds from the likes of Schroders in the UK and Clocktower in the UA can offer investors a more suitable liquidity structure that avoids these perpetually undervalued shares.

Any opinions expressed by Citywire, its staff or columnists do not constitute a personal recommendation to you to buy, sell, underwrite or subscribe for any particular investment and should not be relied upon when making (or refraining from making) any investment decisions. In particular, the information and opinions provided by Citywire do not take into account people’s personal circumstances.