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Diversification and Fund Performance—An Analysis of Buyout Funds

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  • Matthias Huss

    (Faculty of Business and Economics, University of Basel, Peter-Merian-Weg 6, 4002 Basel, Switzerland
    Informatics and Sustainability Research Group, University of Zurich, 8050 Zurich, Switzerland
    Center for Comparative and International Studies, ETH Zurich, 8006 Zurich, Switzerland)

  • Daniel Steger

    (de Pury Pictet Turrettini & Cie SA, Niederdorfstrasse 88, 8001 Zurich, Switzerland)

Abstract

This paper studies the relationship between portfolio diversification and fund performance, based on an unexplored, hand-collected dataset of buyout funds. The dataset comprises detailed information at the level of portfolio companies, which allows measuring the concentration of the fund portfolios towards individual companies, industrial, and geographical focus. Our results suggest that diversification within, but not across industries, associates with higher buyout fund performance. We do not find a significant relationship between geographical diversification and performance. These results partly contradict results documented in prior literature.

Suggested Citation

  • Matthias Huss & Daniel Steger, 2020. "Diversification and Fund Performance—An Analysis of Buyout Funds," JRFM, MDPI, vol. 13(6), pages 1-17, June.
    • Handle: RePEc:gam:jjrfmx:v:13:y:2020:i:6:p:136-:d:375175
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    References listed on IDEAS

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