The Relative Performances of Large Buyout Fund Groups

Abstract

Investors tend to concentrate their buyout fund commitments in the large fund groups. These groups, or families, manage multiple individual buyout funds. Due to their size and their number of funds, many investors consider the large fund families to be the “winners” in the buyout industry. However, as a group, since 1990, they have not been outstanding performers, and their median performance results were only slightly above average. Over the last ten years (i.e., 2005 vintage), their quartile performance has been only average. The authors’ conclusions pose several questions as to why investors favor large fund families over smaller groups.

TOPICS: Private equity, performance measurement, portfolio construction, statistical methods