Benchmarking the Performance of Private Equity Portfolios of the World’s Largest Institutional Investors: A View from CEM Benchmarking
| Autor: | Alexander Beath, Chris Flynn |
|---|---|
| Rok vydání: | 2020 |
| Předmět: |
Finance
050208 finance business.industry Strategy and Management 05 social sciences Institutional investor Equity (finance) 030206 dentistry Benchmarking 03 medical and health sciences Net asset value 0302 clinical medicine Private equity Style investing Management of Technology and Innovation 0502 economics and business Portfolio Project portfolio management business |
| Zdroj: | The Journal of Investing. 30:67-87 |
| ISSN: | 2168-8613 1068-0896 |
| DOI: | 10.3905/joi.2020.1.155 |
| Popis: | The CEM database contains private equity true-time weighted portfolio returns net of investment costs, along with self-reported benchmark returns for some of the largest institutional investors in the world. To quantify performance, the article uses a consistent benchmarking methodology, employing geographic blends of small-cap equity indexes and showing that the method yields a better benchmark. From 1996–2018, private equity slightly underperforms the benchmark, indicating that the returns for private equity are comparable to those of listed equity. TOPICS:Private equity, performance measurement, equity portfolio management, style investing, statistical methods, pension funds Key Findings • Of the private equity benchmarks currently used by investors, most are flawed. A benchmarking method using listed small-cap equity, with a lag of between three and five months, is sufficient to benchmark most private equity portfolios. • The average private equity portfolio historically underperforms this simple investible benchmark. The average net value added from 1996–2018 is −0.67%. • Costs strongly affect relative performance; low-cost internal direct or co-investment private equity outperforms high-cost fund-of-funds private equity. |
| Databáze: | OpenAIRE |
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