Managing Diversifiable Risk in Private Equity
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Oliver Laubach
Abstract
We use a unique dataset to examine the diversifiable risk of private equity portfolios held by limited partners (LPs). Our simulation results show that diversification across the number deals significantly mitigates idiosyncratic portfolio risk in large LP portfolios. Especially for buyout investments, syndicated deals reduce idiosyncratic portfolio risk, whereas deals shared by several partners within the same LP portfolio increase this risk. Looking at a sample of real LPs, our findings indicate that some investors have particularly high skills in identifying the most diversified general partners and selecting the most diversified funds. Additionally, we find that certain LPs simultaneously invest in several deal partners of a syndicated deal more frequently than chance and that these deals have a favorable risk-return profile.
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Articles in the same Issue
- Cover
- Inhaltsverzeichnis
- Impressum
- Aufsätze
- Haftung bei einem qualifizierten Phishing mit weiteren Elementen des Social Engineering
- A promise kept? The first years of experience of the Appeal Panel of the SRB
- Managing Diversifiable Risk in Private Equity
- ZBB-Dokumentation
- Final Decision of the Single Resolution Board (SRB) Appeal Panel, BNP Paribas S.A., BNP Paribas Personal Finance and BGL BNP Paribas v the Single Resolution Board (Case 1/2022, 14 April 2023)
- Rechtsprechung
- Entscheidungen in Leitsätzen
