According to a new study in The Journal of Finance, private equity has average returns roughly equal to the S&P 500 (net of management fees). This contradicts the myth that private equity outperforms the public market benchmarks by 4%-6% annually. However, there is large variation in performance across private equity partnerships. We also find that there is a significant amount of persistence in private equity, not only among successful funds but also for the unsuccessful ones. Successful private equity groups tend to continue to be successful, while poorly performing investments tend to continue to perform poorly.
This persistence result is very different from the results for other asset classes like mutual funds and hedge funds where persistence, if it exists at all, is modest or minimal. Moreover, the study demonstrates a cyclical pattern to investment flows into private equity. Investment flows into the industry tend to increase after periods of good private equity performance and decreases after poor performance. Subsequent returns to private equity are lower after periods of large investment inflows and vice versa for out flows. Interestingly the study finds that returns of established funds with good track records are much less affected by the industry cycles than the returns of young funds (especially those that enter in boom times).
This study has important implications for investors. Because there is such a large range of performance among various firms, investors need to be selective to find funds that have proven consistently successful. The wise investor will not simply assume that these investments will do significantly better than investments in public markets.
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The miniaturization of the current technology of storage media is hindered by fundamental limits of quantum mechanics. A new approach consists in using so-called spin-crossover molecules as the smallest possible storage unit. Similar to normal hard drives, these special molecules can save information via their magnetic state. A research team from Kiel University has now managed to successfully place a new class of spin-crossover molecules onto a surface and to improve the molecule’s storage capacity. The storage density of conventional hard drives could therefore theoretically be increased by more than one hundred fold. The study has been published in the scientific journal Nano Letters.
Over the past few years, the building blocks of storage media have gotten ever smaller. But further miniaturization of the current technology is hindered by...
With innovative experiments, researchers at the Helmholtz-Zentrums Geesthacht and the Technical University Hamburg unravel why tiny metallic structures are extremely strong
Light-weight and simultaneously strong – porous metallic nanomaterials promise interesting applications as, for instance, for future aeroplanes with enhanced...
An interdisciplinary group of researchers interfaced individual bacteria with a computer to build a hybrid bio-digital circuit - Study published in Nature Communications
Scientists at the Institute of Science and Technology Austria (IST Austria) have managed to control the behavior of individual bacteria by connecting them to a...
Physicists in the Laboratory for Attosecond Physics (run jointly by LMU Munich and the Max Planck Institute for Quantum Optics) have developed an attosecond electron microscope that allows them to visualize the dispersion of light in time and space, and observe the motions of electrons in atoms.
The most basic of all physical interactions in nature is that between light and matter. This interaction takes place in attosecond times (i.e. billionths of a...
Transistors based on carbon nanostructures: what sounds like a futuristic dream could be reality in just a few years' time. An international research team working with Empa has now succeeded in producing nanotransistors from graphene ribbons that are only a few atoms wide, as reported in the current issue of the trade journal "Nature Communications."
Graphene ribbons that are only a few atoms wide, so-called graphene nanoribbons, have special electrical properties that make them promising candidates for the...
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08.12.2017 | Information Technology