Private Equity Performing Better than We Thought?
Private Equity Performance: What Do We Know?
- ROBERT S. HARRIS, TIM JENKINSON andSTEVEN N. KAPLAN
- A version of the paper can be found here.
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We study the performance of nearly 1,400 U.S. buyout and venture capital funds using a new data set from Burgiss. We find better buyout fund performance than previously documented – performance has consistently exceeded that of public markets. Outperformance versus the S&P 500 averages 20% to 27% over a fund’s life and more than 3% annually. Venture capital funds outperformed public equities in the 1990s, but underperformed in the 2000s. Our conclusions are robust to various indices and risk controls. Performance in Cambridge Associates and Preqin is qualitatively similar to that in Burgiss, but is lower in Venture Economics.
The figure below highlights the performance of the new dataset relative to datasets from prior papers by Kaplan and Schoar (2005) and Phalippou and Gotschalgh (2009).
Maybe PE/VC isn’t high beta in expensive clothing?
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Definitions of common statistics used in our analysis are available here (towards the bottom)