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Asset Allocation with Private Equity

Arthur G. Korteweg & Mark M. Westerfield

Foundations and Trends in Finance2022https://doi.org/10.1561/0500000062article
AJG 2ABDC B
Weight
0.68

Abstract

We survey the literature on the private equity partnership arrangement from the perspective of an outside investor (limited partner). We examine how the partnership arrangement fits into a broader portfolio of investments, and we consider the methods and difficulties in performance measurement, both at the fund level and at the asset class level. We follow with a discussion of performance persistence and the skill and pricing power of both general and limited partners. We continue by examining the limited partner’s problem of managing commitments and investments over time while diversifying across funds in light of both idiosyncratic and systematic shocks. We close with a summary of recent work on optimal portfolio allocation to private equity. Throughout, we consider how empirical and theoretical work match the particular institutional details of private equity, and we identify 27 open questions to help guide private equity research forward.

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https://doi.org/https://doi.org/10.1561/0500000062

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@article{arthur2022,
  title        = {{Asset Allocation with Private Equity}},
  author       = {Arthur G. Korteweg & Mark M. Westerfield},
  journal      = {Foundations and Trends in Finance},
  year         = {2022},
  doi          = {https://doi.org/https://doi.org/10.1561/0500000062},
}

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Evidence weight

0.68

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.84 × 0.4 = 0.34
M · momentum0.80 × 0.15 = 0.12
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.