Come to the private side: The returns and risks of private equity funds and funds of funds
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School of Business |
Bachelor's thesis
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Authors
Date
2022
Department
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Mcode
Degree programme
Rahoitus
Language
fi
Pages
38
Series
Abstract
In this thesis I examine the returns that private equity and venture capital funds have yielded to investor between 1984 and 2019 with focus on returns between 2010 and 2019. I also examine the returns and risks of private equity funds of funds and their risk-return profile. To determine the returns, I use the IRR and TVPI of each vintage year. In addition, I discuss the public market equivalent (PME) approach to returns comparisons and provide a rough estimate of the PME for PE and VC funds. To determine the risks, I use standard deviation of IRRs as a measure of risk. I find that private equity and venture capital funds have yielded excess returns compared to the public market. Secondly, I observe that this is the case also for private equity funds of funds. Thirdly, I find that funds of funds provide lower risk and are only partially exposed to same return factors as individual private equity funds.Description
Thesis advisor
Joenväärä, JuhaKeywords
Private Equity, Venture Capital, IRR, TVPI, PME, Fund of funds