Smart Institutions, Foolish Choices? The Limited Partner Performance Puzzle
Josh Lerner (),
Antoinette Schoar () and
Authors registered in the RePEc Author Service: Wan Wongsunwai
No 11136, NBER Working Papers from National Bureau of Economic Research, Inc
The returns that institutional investors realize from private equity investments differ dramatically across institutions. Using detailed and hitherto unexplored records of fund investors and performance, we document large heterogeneity in the performance of different classes of limited partners. In particular, endowments' annual returns are nearly 14% greater than average. Funds selected by investment advisors and banks lag sharply. These results are robust to controlling for the type and year of the investment, as well as to the use of different specifications. Analyses of reinvestment decisions and young funds suggest that the results are not primarily due to endowments' greater access to established funds. Finally, we examine the differences in the choice of intermediaries across various institutional investors and their relationship to success. We find that LPs that have higher average IRRs also tend to invest in older funds and have a smaller fraction of GPs in their geographic area, and that the performance of university endowments is correlated with measures of the quality and loyalty of the student body.
JEL-codes: G1 G2 (search for similar items in EconPapers)
Note: AP CF
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (20) Track citations by RSS feed
Published as Lerner, Josh, Antoinette Schoar and Wan Wong. "Smart Institutions, Foolish Choices?: The Limited Partner Performance Puzzle." Journal of Finance 62 (2007): 731-764.
Downloads: (external link)
Journal Article: Smart Institutions, Foolish Choices: The Limited Partner Performance Puzzle (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:11136
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Series data maintained by ().