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Performance Persistence

In: Private Equity Unchained

Author

Listed:
  • Thomas Meyer

    (LDS Partners)

Abstract

The classic financial services caveat that ‘past performance is not indicative of future returns’, sits oddly with the wide consensus among investors that there is a link between prior fund returns and those in the future. What evidence there is seems to support such a link. For venture capital, Conner (2005) found that follow-on funds raised by fund managers whose prior fund’s performance was in the top quartile had a 44 per cent chance of achieving a top-quartile IRR. Several other studies for private equity funds come to comparable results. If the distribution of returns across GPs were perfectly random and previous returns were irrelevant this figure would be 25 per cent.1

Suggested Citation

  • Thomas Meyer, 2014. "Performance Persistence," Palgrave Macmillan Books, in: Private Equity Unchained, chapter 0, pages 111-122, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-28682-6_11
    DOI: 10.1057/9781137286826_11
    as

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