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Private Equity Performance: Returns, Persistence, and Capital Flows
Author(s) -
KAPLAN STEVEN N.,
SCHOAR ANTOINETTE
Publication year - 2005
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.2005.00780.x
Subject(s) - fund of funds , private equity fund , limited partnership , private equity , closed end fund , equity (law) , business , global assets under management , monetary economics , economics , open end fund , private equity secondary market , finance , general partnership , institutional investor , law , political science , corporate governance , market liquidity
This paper investigates the performance and capital inflows of private equity partnerships. Average fund returns (net of fees) approximately equal the S&P 500 although substantial heterogeneity across funds exists. Returns persist strongly across subsequent funds of a partnership. Better performing partnerships are more likely to raise follow‐on funds and larger funds. This relationship is concave, so top performing partnerships grow proportionally less than average performers. At the industry level, market entry and fund performance are procyclical; however, established funds are less sensitive to cycles than new entrants. Several of these results differ markedly from those for mutual funds.