Financial intermediation in private equity: How well do funds of funds perform? / by Robert S. Harris, Tim Jenkinson, Steven N. Kaplan & Ruediger Stucke
Financial intermediation in private equity: How well do funds of funds perform? / by Robert S. Harris, Tim Jenkinson, Steven N. Kaplan & Ruediger Stucke
Robert S. Harris, Tim Jenkinson, Steven N. Kaplan & Ruediger Stucke
- Amsterdam Elsevier August 2018
- Pages 287-305
- Journal of Financial Economics 129 (2) 0304-405X .
Abstract
This paper focuses on funds of funds (FOFs) as a form of financial intermediation in private equity (both buyout and venture capital). After accounting for fees, FOFs provide returns equal to or above public market indices for both buyout and venture capital. While FOFs focusing on buyouts outperform public markets, they underperform direct fund investment strategies in buyout. In contrast, the average performance of FOFs in venture capital is on a par with results from direct venture fund investing. This suggests that FOFs in venture capital (but not in buyouts) are able to identify and access superior performing funds.
0304-405X
Abstract
This paper focuses on funds of funds (FOFs) as a form of financial intermediation in private equity (both buyout and venture capital). After accounting for fees, FOFs provide returns equal to or above public market indices for both buyout and venture capital. While FOFs focusing on buyouts outperform public markets, they underperform direct fund investment strategies in buyout. In contrast, the average performance of FOFs in venture capital is on a par with results from direct venture fund investing. This suggests that FOFs in venture capital (but not in buyouts) are able to identify and access superior performing funds.
0304-405X