Buyout funds outperform public markets

Returns from investments on the stock market were compared to the IRR performance of selected UK-based European buyout funds invested in by Pantheon.

London Business School and HEC in Paris analysed the funds against comparable public market investment benchmarks and found a difference in returns of 11.51 per cent.

“It is clear that the buyout funds in the sample created value beyond the returns obtainable from replicating their investments in the public markets,” says Oliver Gottschalg of HEC.

The analysis used four benchmarks to compare returns between the buyout and public market investments: buy and hold return on the broad stock market index; return on the broad public stock market index based on matched investment timing; return on the broad stock market index based on matched investment timing with leverage; and return on industry-matched public stock market indices based on matched investment timing and with leverage.

Returns from investments on the stock market were compared to the IRR performance of selected UK-based European buyout funds invested in by Pantheon.

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