The Performance of Private Equity Funds

Ludovic Phalippou and Oliver Gottschalg

The Review of Financial Studies, 2009, vol. 22, issue 4, 1747-1776

Abstract: The performance of private equity funds as reported by industry associations and previous research is overstated. A large part of performance is driven by inflated accounting valuation of ongoing investments and we find a bias toward better performing funds in the data. We find an average net-of-fees fund performance of 3% per year below that of the S&P 500. Adjusting for risk brings the underperformance to 6% per year. We estimate fees to be 6% per year. We discuss several misleading aspects of performance reporting and some side benefits as a first step toward an explanation. The Author 2008. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oxfordjournals.org., Oxford University Press.

Date: 2009
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Related works:
Working Paper: The Performance of Private Equity Funds (2009)
Working Paper: The Performance of Private Equity Funds (2009)
Working Paper: The performance of private equity funds (2006)
Working Paper: The Performance of Private Equity Funds (2006)
Working Paper: The Performance of Private Equity Funds (2006)
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