Diversification and Fund Performance—An Analysis of Buyout Funds

Matthias Huss and Daniel Steger
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Matthias Huss: Faculty of Business and Economics, University of Basel, Peter-Merian-Weg 6, 4002 Basel, Switzerland
Daniel Steger: de Pury Pictet Turrettini & Cie SA, Niederdorfstrasse 88, 8001 Zurich, Switzerland

JRFM, 2020, vol. 13, issue 6, 1-17

Abstract: This paper studies the relationship between portfolio diversification and fund performance, based on an unexplored, hand-collected dataset of buyout funds. The dataset comprises detailed information at the level of portfolio companies, which allows measuring the concentration of the fund portfolios towards individual companies, industrial, and geographical focus. Our results suggest that diversification within, but not across industries, associates with higher buyout fund performance. We do not find a significant relationship between geographical diversification and performance. These results partly contradict results documented in prior literature.

Keywords: performance; buyout funds; diversification; systematic risk (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2020
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