Performance Persistence

Thomas Meyer
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Thomas Meyer: LDS Partners

Chapter Chapter 11 in Private Equity Unchained, 2014, pp 111-122 from Palgrave Macmillan

Abstract: Abstract The classic financial services caveat that ‘past performance is not indicative of future returns’, sits oddly with the wide consensus among investors that there is a link between prior fund returns and those in the future. What evidence there is seems to support such a link. For venture capital, Conner (2005) found that follow-on funds raised by fund managers whose prior fund’s performance was in the top quartile had a 44 per cent chance of achieving a top-quartile IRR. Several other studies for private equity funds come to comparable results. If the distribution of returns across GPs were perfectly random and previous returns were irrelevant this figure would be 25 per cent.1

Keywords: Venture Capital; Mutual Fund; Private Equity; Fund Manager; Asset Class (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-28682-6_11

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DOI: 10.1057/9781137286826_11

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