Working Paper: CEPR ID: DP18372
Authors: Alon Brav; Guy Lakan; Yishay Yafeh
Abstract: We assemble cash flow data on all investments by Israeli pension providers in private equity and venture capital funds over nearly 20 years to evaluate their realized performance which has beenmostly unavailable for non-US-based funds and limited partners. We obtain three main results: (i) The performance experienced by Israeli LPs has been slightly below the performance derived fromthe US-based literature and data sources. This finding appears to be driven by both limited access to top performing, seasoned, US funds, as well as by limited skill in selecting first-time US funds;(ii) Investments in local Israeli funds have outperformed investments in foreign funds, which we attribute to both superior access to, and superior selection skills of, local funds; (iii) We compare ourdata and results to those based on Preqin, one of the most commonly used commercial data bases, and find that it tends to omit small funds as well as funds with poor performance, both within and outside the US. While Preqin may provide reliable estimates of industry-wide performance, it may not always reflect the actual returns realized by non-US based limited partners.
Keywords: Institutional Investors; Limited Partners; Private Equity; Venture Capital
JEL Codes: G20; G23; G24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Israeli LPs (F39) | performance outcomes (L25) |
| limited access to top-performing funds (G23) | performance outcomes (L25) |
| limited skill in selecting first-time funds (G11) | performance outcomes (L25) |
| local fund investments (G23) | higher performance outcomes (D29) |
| superior access and selection skills (D82) | higher performance outcomes (D29) |
| dataset quality (Y10) | performance measurement accuracy (C52) |