Time: 1.00 - 2.00pm Venue: Room 3.21, Old Building, LSE (map)
Speaker: Elise Gourier (Queen Mary University of London)
Seminar Title: How Alternative Are Alternative Investments? The Case of Private Equity Funds
Abstract: Private equity funds are vehicles that accommodate a variety of investment opportunities. While they have traditionally been classified into a few categories (Venture Capital, Distressed Debt), not all funds are easily labeled. In addition, we find considerable performance heterogeneity within each category. We statistically re-categorize the full panel of private equity funds into a few portfolios of funds. Reducing the dimensionality allows us to test whether private equity funds deliver on the promise of alternative assets. We find that a sub-set of private equity funds, mainly comprising large Buyout and Venture Capital funds, have provided diversification benefits to investors; most Real Asset funds have not. In addition, we find that hardly any of the factors that have been shown to relate to public equity returns are significantly related to private equity returns.