Financial Intermediation in Private Equity: How Well Do Funds of Funds Perform?

NBER Working Paper No. 23428

Issued in May 2017

NBER Program(s):Corporate Finance



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.

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Document Object Identifier (DOI): 10.3386/w23428

Published: Robert S. Harris & Tim Jenkinson & Steven N. Kaplan & Ruediger Stucke, 2018. "Financial Intermediation in Private Equity: How Well Do Funds of Funds Perform?," Journal of Financial Economics, . citation courtesy of

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