Articles

The Performance of Private Equity Funds

L. Phalippou, O. GOTTSCHALG

Review of Financial Studies

avril 2009, vol. 22, n°4, pp.1747-1776

Départements : Stratégie et Politique d’Entreprise, GREGHEC (CNRS)

Mots clés : Financial investments, Private equity, Capital investments, Investment funds, Fees, Investors, Cash flow, Venture capital, Datasets, Investment strategies

http://ssrn.com/abstract=473221


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


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