Skip to main content

Main menu

  • Home
  • Current Issue
  • Past Issues
  • Videos
  • Submit an article
  • More
    • About JPE
    • Editorial Board
    • Published Ahead of Print (PAP)
  • IPR Logo
  • About Us
  • Journals
  • Publish
  • Advertise
  • Videos
  • Webinars
  • More
    • Awards
    • Article Licensing
    • Academic Use

User menu

  • Sample our Content
  • Request a Demo
  • Log in

Search

  • Advanced search
The Journal of Private Equity
  • IPR Logo
  • About Us
  • Journals
  • Publish
  • Advertise
  • Videos
  • Webinars
  • More
    • Awards
    • Article Licensing
    • Academic Use
  • Sample our Content
  • Request a Demo
  • Log in
The Journal of Private Equity

The Journal of Private Equity

ADVANCED SEARCH: Discover more content by journal, author or time frame

  • Home
  • Current Issue
  • Past Issues
  • Videos
  • Submit an article
  • More
    • About JPE
    • Editorial Board
    • Published Ahead of Print (PAP)
  • Follow IIJ on LinkedIn
  • Follow IIJ on Twitter
Article

The Curious Year-to-Year Performance of Buyout Fund Returns: Another Mark-to-Market Problem?

Jeff Hooke and Ken Yook
The Journal of Private Equity Winter 2017, 21 (1) 9-19; DOI: https://doi.org/10.3905/jpe.2017.21.1.009
Jeff Hooke
is a senior lecturer at the Johns Hopkins Carey Business School in Washington, DC
  • Find this author on Google Scholar
  • Find this author on PubMed
  • Search for this author on this site
Ken Yook
is an associate professor at the Johns Hopkins Carey Business School in Washington, DC
  • Find this author on Google Scholar
  • Find this author on PubMed
  • Search for this author on this site
  • Article
  • Info & Metrics
  • PDF (Subscribers Only)
Loading

Click to login and read the full article.

Don’t have access? Click here to request a demo 
Alternatively, Call a member of the team to discuss membership options
US and Overseas: +1 646-931-9045
UK: 0207 139 1600

Abstract

Buyout funds are essentially leveraged portfolios of a certain kind of U.S. company—that is, a small-cap, low-tech, nonfinancial, nonutility, generator of consistent earnings before interest, taxes, depreciation, and amortization with moderate cyclicality. These characteristics enable lenders to provide high debt levels with a reasonable expectation of repayment. Recent academic studies have raised doubts regarding the alpha of buyout fund returns against mimicking publicly traded portfolios, and buyout investors have sometimes responded that lower returns are offset by the funds’ lower volatility relative to public stocks. Regarding the volatility of such returns, several studies have used a cash-flow-only estimation (CFOE) approach to calculate risk, as an alternative to relying on (1) actual cash flows paid to limited partners and (2) the asset valuations of unsold investments as determined by buyout fund general partners. These studies have suggested that buyout funds’ reported return volatility is understated relative to times-series public market equity returns. This study uses a methodology other than CFOE to evaluate buyout fund return volatility. The authors use a publicly traded mimicking portfolio, adjusted for buyout-type leverage, to measure risk, and conclude that buyout fund returns are more volatile than public equity market returns.

  • © 2017 Pageant Media Ltd
View Full Text

Don’t have access? Click here to request a demo

Alternatively, Call a member of the team to discuss membership options

US and Overseas: +1 646-931-9045

UK: 0207 139 1600

Log in using your username and password

Forgot your user name or password?
PreviousNext
Back to top

Explore our content to discover more relevant research

  • By topic
  • Across journals
  • From the experts
  • Monthly highlights
  • Special collections

In this issue

The Journal of Private Equity: 21 (1)
The Journal of Private Equity
Vol. 21, Issue 1
Winter 2017
  • Table of Contents
  • Index by author
Print
Download PDF
Article Alerts
Sign In to Email Alerts with your Email Address
Email Article

Thank you for your interest in spreading the word on The Journal of Private Equity.

NOTE: We only request your email address so that the person you are recommending the page to knows that you wanted them to see it, and that it is not junk mail. We do not capture any email address.

Enter multiple addresses on separate lines or separate them with commas.
The Curious Year-to-Year Performance of Buyout Fund Returns: Another Mark-to-Market Problem?
(Your Name) has sent you a message from The Journal of Private Equity
(Your Name) thought you would like to see the The Journal of Private Equity web site.
CAPTCHA
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.
Citation Tools
The Curious Year-to-Year Performance of Buyout Fund Returns: Another Mark-to-Market Problem?
Jeff Hooke, Ken Yook
The Journal of Private Equity Nov 2017, 21 (1) 9-19; DOI: 10.3905/jpe.2017.21.1.009

Citation Manager Formats

  • BibTeX
  • Bookends
  • EasyBib
  • EndNote (tagged)
  • EndNote 8 (xml)
  • Medlars
  • Mendeley
  • Papers
  • RefWorks Tagged
  • Ref Manager
  • RIS
  • Zotero
Save To My Folders
Share
The Curious Year-to-Year Performance of Buyout Fund Returns: Another Mark-to-Market Problem?
Jeff Hooke, Ken Yook
The Journal of Private Equity Nov 2017, 21 (1) 9-19; DOI: 10.3905/jpe.2017.21.1.009
del.icio.us logo Digg logo Reddit logo Twitter logo CiteULike logo Facebook logo Google logo LinkedIn logo Mendeley logo
Tweet Widget Facebook Like LinkedIn logo

Jump to section

  • Article
    • Abstract
    • LITERATURE REVIEW
    • METHODOLOGY
    • CONCLUSIONS
    • APPENDIX
    • ENDNOTES
    • REFERENCES
  • Info & Metrics
  • PDF (Subscribers Only)
  • PDF (Subscribers Only)

Similar Articles

Cited By...

  • The Grand Experiment: The State and Municipal Pension Fund Diversification into Alternative Assets
  • Google Scholar

More in this TOC Section

  • Editor’s Letter
  • Editor’s Letter
  • Private Equity Trends to Look Out for in 2019
Show more Article
LONDON
One London Wall, London, EC2Y 5EA
United Kingdom
+44 207 139 1600
 
NEW YORK
41 Madison Avenue, New York, NY 10010
USA
+1 646 931 9045
pm-research@pageantmedia.com
 

Stay Connected

  • Follow IIJ on LinkedIn
  • Follow IIJ on Twitter

MORE FROM PMR

  • Home
  • Awards
  • Investment Guides
  • Videos
  • About PMR

INFORMATION FOR

  • Academics
  • Agents
  • Authors
  • Content Usage Terms

GET INVOLVED

  • Advertise
  • Publish
  • Article Licensing
  • Contact Us
  • Subscribe Now
  • Log In
  • Update your profile
  • Give us your feedback

© 2021 Pageant Media Ltd | All Rights Reserved | ISSN: 1096-5572 | E-ISSN: 2168-8508

  • Site Map
  • Terms & Conditions
  • Privacy Policy
  • Cookies