Abstract

http://ssrn.com/abstract=1798747
 
 

References (31)



 
 

Citations (8)



 


 



Local Overweighting and Underperformance: Evidence from Limited Partner Private Equity Investments


Yael V. Hochberg


NBER

Joshua D. Rauh


Stanford Graduate School of Business; National Bureau of Economic Research (NBER)

January 31, 2012


Abstract:     
Institutional investors exhibit substantial home-state bias in private equity. This effect is particularly pronounced for public pension fund investments in venture capital and real estate. Public pension funds achieve performance on in-state investments that is 2-4 percentage points lower than both their own similar out-of-state investments and similar investments in their state by out-of-state investors. States with political climates characterized by more self-dealing invest a larger share of their portfolio locally. Relative to the performance of the rest of the private equity universe, overweighting and underperformance in local investments reduce public pension fund resources by $1.2 billion per year.

Number of Pages in PDF File: 87

Keywords: Public Pension Funds, Portfolio Choice, Private Equity, Home Bias, Limited Partner Performance Puzzle

JEL Classification: G11, G23, G24, M13

working papers series


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Date posted: March 31, 2011 ; Last revised: October 18, 2012

Suggested Citation

Hochberg, Yael V. and Rauh, Joshua D., Local Overweighting and Underperformance: Evidence from Limited Partner Private Equity Investments (January 31, 2012). Available at SSRN: http://ssrn.com/abstract=1798747 or http://dx.doi.org/10.2139/ssrn.1798747

Contact Information

Yael V. Hochberg (Contact Author)
NBER ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Joshua D. Rauh
Stanford Graduate School of Business ( email )
518 Memorial Way
Stanford, CA 94305-5015
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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