Financial Intermediation in Private Equity: How Well Do Funds of Funds Perform?
55 Pages Posted: 20 Jun 2015 Last revised: 13 May 2017
There are 2 versions of this paper
Financial Intermediation in Private Equity: How Well Do Funds of Funds Perform?
Financial Intermediation in Private Equity: How Well Do Funds of Funds Perform?
Date Written: May 11, 2017
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.
Keywords: private equity, fund of funds, financial intermediation, venture capital
JEL Classification: G20, G23
Suggested Citation: Suggested Citation
Robert S. Harris (Contact Author)
University of Virginia - Darden School of Business ( email )
P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4823 (Phone)
434-924-4859 (Fax)
HOME PAGE: http://www.darden.virginia.edu/faculty/harris.htm
Tim Jenkinson
University of Oxford - Said Business School ( email )
Park End Street
Oxford, OX1 1HP
United Kingdom
+44 1865 288916 (Phone)
+44 1865 288831 (Fax)
HOME PAGE: http://www.sbs.oxford.edu/timjenkinson
Steven Neil Kaplan
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-4513 (Phone)
773-702-0458 (Fax)
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