{"id":44154,"date":"2017-08-01T10:04:53","date_gmt":"2017-08-01T08:04:53","guid":{"rendered":"https:\/\/newserver.fyb.de\/produkt\/analyzing-the-performance-of-private-equity-funds-what-do-the-scientific-studies-show\/"},"modified":"2017-08-01T10:04:53","modified_gmt":"2017-08-01T08:04:53","slug":"analysis-of-performance-of-private-equity-funds-what-do-the-scientific-studies-show","status":"publish","type":"product","link":"https:\/\/www.fyb.de\/en\/produkt\/analysis-of-performance-of-private-equity-funds-what-do-the-scientific-studies-show\/","title":{"rendered":"Analyzing the performance of private equity funds: what do the scientific studies show?"},"content":{"rendered":"

Dr. Mariela Borell<\/strong> \u2014 Senior Rese\u00adar\u00adcher Centre for Euro\u00adpean Econo\u00admic Rese\u00adarch (ZEW), Mannheim<\/p>\n","protected":false},"excerpt":{"rendered":"

The perfor\u00admance of the private equity indus\u00adtry is often the focus of contro\u00adver\u00adsial discus\u00adsions. It is a chall\u00adenge for both rese\u00adar\u00adchers and inves\u00adtors to analyze the histo\u00adri\u00adcal perfor\u00admance of private equity funds in an over\u00adall market view.<\/strong><\/p>\n

The methods used to study equity markets are not appli\u00adca\u00adble to private equity inves\u00adt\u00ading because of the lack of active and trans\u00adpa\u00adrent markets for the private equity asset class. In addi\u00adtion, fund mana\u00adgers are not requi\u00adred to publish their perfor\u00admance or cash flows, and infor\u00adma\u00adtion from specia\u00adli\u00adzed data provi\u00adders is often only available in aggre\u00adga\u00adted or anony\u00admi\u00adzed form, making it diffi\u00adcult to verify and compare. Perfor\u00admance data on indi\u00advi\u00addual funds is often incom\u00adplete in main\u00adstream private equity data\u00adba\u00adses, available with vary\u00ading coverage of the market, and cash flow infor\u00adma\u00adtion that allows plau\u00adsi\u00adbi\u00adlity of perfor\u00admance is rarely provided.<\/p>\n

Studies based on data from Limi\u00adted Partners <\/strong><\/p>\n

For this reason, rese\u00adar\u00adchers are incre\u00adasingly choo\u00adsing the approach of coll\u00adec\u00adting and analy\u00adzing cash flow data directly from one or more insti\u00adtu\u00adtio\u00adnal inves\u00adtors (limi\u00adted part\u00adners). The relia\u00adbi\u00adlity of this data is justi\u00adfied by the fact that the infor\u00adma\u00adtion regu\u00adlarly serves as the basis for the Limi\u00adted Part\u00adners\u2019 own invest\u00adments. Most of these studies find that the private equity asset class signi\u00adfi\u00adcantly outper\u00adforms public equity bench\u00admarks, which are typi\u00adcally repre\u00adsen\u00adted by equity markets.<\/p>\n

In their highly cited study, Ljung\u00adq\u00advist and Richard\u00adson (2003) show excess returns of private equity funds rela\u00adtive to the S&P 500 stock index between 5 and 8 percen\u00adtage points per year for the period from 1981 to 2001. Robin\u00adson and Sensoy (2011), using data from a large insti\u00adtu\u00adtio\u00adnal limi\u00adted part\u00adner, analyze the period from 1984 to 2010 and find that, on average, private equity funds outper\u00adform the S&P 500 over the life of the fund by about 18 percent (net of fees) for the same period.<\/p>\n","protected":false},"featured_media":41340,"comment_status":"open","ping_status":"closed","template":"","meta":{"wp_typography_post_enhancements_disabled":false},"product_brand":[],"product_cat":[2452,2550,2590],"product_tag":[2202,2205,2212,2214,2224,2232],"class_list":{"0":"post-44154","1":"product","2":"type-product","3":"status-publish","4":"has-post-thumbnail","6":"product_cat-ebook-en","7":"product_cat-fyb-2015","8":"product_cat-dr-mariela-borell-en","9":"product_tag-borell-en","10":"product_tag-mariela-en","11":"product_tag-private-equity-asset-class","12":"product_tag-cash-flow-information","13":"product_tag-public-equity-benchmarks-en","14":"product_tag-excess-return","15":"pa_sprache-english-3","16":"pa_sprache-german","18":"first","19":"outofstock","20":"taxable","21":"shipping-taxable","22":"purchasable","23":"product-type-variable"},"yoast_head":"\nAnalyzing the performance of private equity funds: what do the scientific studies show? - FYB Financial Yearbook<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.fyb.de\/en\/produkt\/analysis-of-performance-of-private-equity-funds-what-do-the-scientific-studies-show\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Analyzing the performance of private equity funds: what do the scientific studies show? - FYB Financial Yearbook\" \/>\n<meta property=\"og:description\" content=\"The performance of the private equity industry is often the focus of controversial discussions. It is a challenge for both researchers and investors to analyze the historical performance of private equity funds in an overall market view. The methods used to study equity markets are not applicable to private equity investing because of the lack of active and transparent markets for the private equity asset class. In addition, fund managers are not required to publish their performance or cash flows, and information from specialized data providers is often only available in aggregated or anonymized form, making it difficult to verify and compare. Performance data on individual funds is often incomplete in mainstream private equity databases, available with varying coverage of the market, and cash flow information that allows plausibility of performance is rarely provided. Studies based on data from Limited Partners For this reason, researchers are increasingly choosing the approach of collecting and analyzing cash flow data directly from one or more institutional investors (limited partners). The reliability of this data is justified by the fact that the information regularly serves as the basis for the Limited Partners' own investments. Most of these studies find that the private equity asset class significantly outperforms public equity benchmarks, which are typically represented by equity markets. In their highly cited study, Ljungqvist and Richardson (2003) show excess returns of private equity funds relative to the S&P 500 stock index between 5 and 8 percentage points per year for the period from 1981 to 2001. Robinson and Sensoy (2011), using data from a large institutional limited partner, analyze the period from 1984 to 2010 and find that, on average, private equity funds outperform the S&P 500 over the life of the fund by about 18 percent (net of fees) for the same period.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.fyb.de\/en\/produkt\/analysis-of-performance-of-private-equity-funds-what-do-the-scientific-studies-show\/\" \/>\n<meta property=\"og:site_name\" content=\"FYB Financial Yearbook\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.fyb.de\/wp-content\/uploads\/2014\/11\/Borell-Mariela-ZEW-e1418029119194.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"354\" \/>\n\t<meta property=\"og:image:height\" content=\"315\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.fyb.de\/en\/produkt\/analysis-of-performance-of-private-equity-funds-what-do-the-scientific-studies-show\/\",\"url\":\"https:\/\/www.fyb.de\/en\/produkt\/analysis-of-performance-of-private-equity-funds-what-do-the-scientific-studies-show\/\",\"name\":\"Analyzing the performance of private equity funds: what do the scientific studies show? 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