The performance of private equity funds

Gottschalg Oliver () and Ludovic Phalippou

No 852, HEC Research Papers Series from HEC Paris

Abstract: Using a unique and comprehensive dataset, the authors show that the sample of mature private equity funds used in previous research and as an industry benchmark is biased towards better performing funds. They also show that accounting values reported by these mature funds for non exited investments are substantial and they provide evidence that they mostly represent living dead investments. After correcting for sample bias and overstated accounting values, average fund performance changes from slight over performance to substantial underperformance of -3.83% per year with respect to the S&P 500. Assuming a typical fee structure, they find that gross-of-fees these funds outperform by 2.96% per year. The authors conclude that the stunning growth in the amount allocated to this asset class cannot be attributed to genuinely high past performance. They discuss several potentially misleading aspects of standard performance reporting and discuss some of the added benefits of investing in private equity funds as a first step towards an explanation for our results.

Keywords: Private equity funds; performance (search for similar items in EconPapers)
JEL-codes: G23 G24 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2006-09-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: The Performance of Private Equity Funds (2009)
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)
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Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:0852

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