Methods And Results Of The Studies of Private Equity Performance

Abstract

Authors: Stepan Aleksandrovich Gusamov National Research University The Higher School of Economics

In the era of globalization, the relationship of financial markets deepens and correlation between theyields on the market assets increases. Due to the economic crisis in recent years there is growing interestin finding new financial assets that are less correlated with traditional tools and allows to increasediversification and reduce portfolio volatility. These financial assets are called alternative investments,including inter alia investments in private equity funds (PEF). This article is a review of studies of riskand return of investments in PEF in developed and emerging markets.Measuring PE returns is not simple due to the nature of the asset, which is characterized by informationopacity, cash flow volatility, low liquidity and long-term investment period. Approaches to valuation ofthe private equity performance are constantly improved, and nevertheless in practice they still often leadto contradictory results.The paper investigates both theoretical approaches to the valuation of risk and return of the private equityfunds and the results of empirical studies assessing private equity performance and determinants that hasan impact on it.