Returns for venture capital funds declined in the second quarter, and the doesn’t forecast improvement any time soon.

The closely followed 10-year return was down 4.2 percent from a negative 3.7 percent in the second quarter. A year ago, 10-year returns were 14.3 percent.

Only 20-year returns increased in the quarter, to 24.3 percent from 24 percent in the first quarter and 22.7 percent a year ago.

Fifteen-year returns slipped just a bit to 38.1 percent in the second quarter from 38.2 percent in the previous quarter and 36.3 percent in 2009.

One-quarter returns dipped to 0.4 percent from 0.7 percent but were higher than the 0.2 percent of the same quarter a year ago.

One-year returns slipped slightly to 6.4 percent from 6.5 percent but were far higher than the 17.1 percent decline in 2009.

Three-year and five-year returns fell to negative 2.7 percent and 4.3 percent in three-year and five-year returns respectively fro negative 0.7 percent and 4.9 percent the previous quarter. A year ago, three-year returns were up 1.3 percent and five-year returns were 5.7 percent.

The returns were calculated by Cambridge Associates U.S. Venture Capital Index.

“While we have seen increased exit volumes in 2010, the number of IPOs and acquisitions have not translated to improved venture returns yet,” said Mark Heesen, president of the NVCA, in a statement.

Heesen doesn’t expect improvement in the short term, either.

“The venture industry will likely see several more quarters of declining performance overall until distributions to limited partners begin to flow more readily in the coming year,” he explained. “Based on the current exit market, the 10 year return number – which we view as the most reflective of industry performance – won’t begin to reverse its negative trend until mid- 2011.

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