Pursuit of Excess Returns: Deciphering Performance in European Buyout Funds A Detailed Exploration of Relative Returns and Their Determinants
Abstract
This paper investigates the relative performance of European buyout funds compared
to public markets. Using a sample of mature buyout funds, obtained from
European limited partners, with vintages between 1995 and 2013, we find that a
European buyout fund, on average, outperforms the STOXX Europe 600 index
by 52% over its lifetime. While our findings display considerable robustness to
various assumptions regarding the opportunity cost of capital, systematic risk,
and unrealized portfolio values, they also highlight an interesting sensitivity to
inter-year variations in relative returns.
Our study contributes to the ongoing debate about the performance of private
equity funds, and the potential determinants of performance, such as fund size,
prespecified target industry, and experience of fund managers. We find evidence
for a narrower investment focus and sector-specific effects positively influencing
performance, findings valuable to investors, academia, and stakeholders alike.
Degree
Master 2-years
Other description
MSc in Finance
Collections
View/ Open
Date
2023-06-29Author
Blomdahl, Gustav
Hillestad Andréasson, Erik
Series/Report no.
2023:204
Language
eng