The Performance of Private Equity Funds: Does Diversification Matter?

Arbeitspapier

This paper is the first systematic analysis of the impact of diversification on the performance of private equity funds. A unique data set allows the exact evaluation of diversification across the dimensions financing stages, industries, and countries. Very different levels of diversification can be observed across sample funds. While some funds are highly specialized others are highly diversified. The empirical results show that the rate of return of private equity funds declines with diversification across financing stages, but increases with diversification across industries. Accordingly, the fraction of portfolio companies which have a negative return or return nothing at all, increase with diversification across financing stages. Diversification across countries has no systematic effect on the performance of private equity funds.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SFB/TR 15 Discussion Paper ; No. 192

Classification and Topics

• Classification: Wirtschaft ; Portfolio Choice; Investment Decisions ; Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies ; New Firms; Startups
• Subject: private equity ; diversification ; specialization ; performance ; rate of return ; percentage of loss

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lossen, Ulrich
• Event: Veröffentlichung
• (who): Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
• (where): München
• (when): 2006

Further information

• DOI: doi:10.5282/ubm/epub.13360
• Handle: http://hdl.handle.net/10419/94165
• URN: urn:nbn:de:bvb:19-epub-13360-8
• Last update: 10.03.2025, 11:42 AM CET