How Implementation Style and Costs Affect Private Equity Performance
6 Pages Posted: 12 Jun 2014
Date Written: May 23, 2014
This article describes a study that analyzed the private equity performance and costs of large pension funds. Using data from the CEM Benchmarking Inc. (CEM) database, we establish that implementation style affects net performance: internal management outperforms external management, and external management outperforms funds of funds (FOF). Since the difference in net performance is due largely to cost, we examine the cost differential of various implementation styles as well as some of the challenges in understanding the true costs of investing in the private equity asset class.
Keywords: Benchmarking, Implementation Style, Investment Performance and Costs, Pension Fund
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