Market-Based Private Equity Returns
55 Pages Posted: 30 May 2019 Last revised: 20 Feb 2020
Date Written: February 20, 2020
Using the universe of Business Development Companies (BDCs), a unique publicly traded segment of U.S. Private Equity (PE), for the period 1998-2017 we provide the first in depth examination of their performance and risk adjusted characteristics. More importantly, we show that the readily available BDC market returns explain the cash flow based proxies of traditional PE fund returns over and above other traded factors. Our findings highlight the importance of BDCs in providing public access to the PE asset class and a readily available market-based benchmark for evaluating both traditional PE investments and transaction based proxies of PE market returns.
Keywords: Business Development Companies, Private Equity, Risk-Return Characteristics, Market-based Performance Measures, Appraisal-based Performance Measures
JEL Classification: G23, G24, G12, G14
Suggested Citation: Suggested Citation