Private Equity Performance: Returns, Persistence, and Capital Flows




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    • *Kaplan is at the University of Chicago Graduate School of Business and at the NBER; Schoar is at the Sloan School of Management at MIT, and at the NBER, and the CEPR. We thank Ken Morse at the MIT Entrepreneurship Center and Jesse Reyes from Venture Economics for making this project possible. We thank Eugene Fama, Laura Field Josh Lerner, Alexander Ljungqvist, Jun Pan, Matt Richardson, Rex Sinquefield, Rob Stambaugh (the editor), Rebecca Zarutskie, an anonymous referee, and seminar participants at Alberta, Arizona State, Chicago, MIT, NBER Corporate Finance, NYSE-Stanford Conference on Entrepreneurial Finance and IPOs, NYU, and USC for helpful comments. Data for this project were obtained from the VentureExpert database collected by Venture Economics.


This paper investigates the performance and capital inflows of private equity partnerships. Average fund returns (net of fees) approximately equal the S&P 500 although substantial heterogeneity across funds exists. Returns persist strongly across subsequent funds of a partnership. Better performing partnerships are more likely to raise follow-on funds and larger funds. This relationship is concave, so top performing partnerships grow proportionally less than average performers. At the industry level, market entry and fund performance are procyclical; however, established funds are less sensitive to cycles than new entrants. Several of these results differ markedly from those for mutual funds.