Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • January 2022
  • Article
  • Journal of Financial Economics

Investing Outside the Box: Evidence from Alternative Vehicles in Private Equity

By: Josh Lerner, Jason Mao, Antoinette Schoar and Nan R. Zhang
  • Format:Print
ShareBar

Abstract

This paper uses previously unexplored custodial data to examine the use of alternative investment vehicles in private equity (PE) over four decades. We document a steep increase in the capital directed to alternative vehicles, with these vehicles approaching a 40% share of all PE commitments in 2017. The average performance of alternative vehicles matches that of the overall PE market, but the performance lagged that of the general partners’ (GPs) corresponding main funds. The best performance in alternative vehicles was by endowments, private pensions, and insurers. Finally, limited partners, (LPs) with better past performance invested in alternative vehicles with better performance, even after conditioning on the GPs’ past records. The results suggest that returns in private equity increasingly depend on the match between GPs and LPs and both parties’ outside options.

Keywords

Alternative Investment Vehicles; Investment Funds; Private Equity; Venture Capital; Performance

Citation

Lerner, Josh, Jason Mao, Antoinette Schoar, and Nan R. Zhang. "Investing Outside the Box: Evidence from Alternative Vehicles in Private Equity." Journal of Financial Economics 143, no. 1 (January 2022): 359–380. (Won the 2022 Doriot Award for the Best Private Equity Research Paper.)
  • Find it at Harvard
  • Read Now

About The Author

Josh Lerner

Entrepreneurial Management
→More Publications

More from the Authors

    • 2022
    • Faculty Research

    Financial Acquisitions

    By: Josh Lerner, Amit Seru and Jennifer Zou
    • 2022
    • Faculty Research

    The Globalization of Silicon Valley: The Dynamics of Start-Up Diffusion

    By: Josh Lerner, Jacob Moscona and David Yang
    • September 2022
    • Faculty Research

    Yinglan Tan: Scaling a Venture Capital Firm in Southeast Asia

    By: Josh Lerner
More from the Authors
  • Financial Acquisitions By: Josh Lerner, Amit Seru and Jennifer Zou
  • The Globalization of Silicon Valley: The Dynamics of Start-Up Diffusion By: Josh Lerner, Jacob Moscona and David Yang
  • Yinglan Tan: Scaling a Venture Capital Firm in Southeast Asia By: Josh Lerner
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College