PRINT THIS PAGE Effect of investment focus and manager selection in private equity returns31/03/2003. Source: University of Chicago, Graduate School of Business. Sridhar Manyem 
 Returns in private equity have outperformed those in public equities over the last few years. However, a historical review of private equity reveals two key trends – median private equity returns tend to underperform public equities and there is a wider dispersion between top quartile and bottom quartile returns than in public equities. These trends make manager selection crucial, argues Sridhar Manyem of the University of Chicago Graduate School of Business.
The author proposes ways in which to select top quartile fund managers and argues that funds with an industry focus tend to outperform diversified funds. Therefore, to move towards an ‘efficient frontier', investors should focus on specialist fund managers, which are more likely to be top quartile performers.
Copyright © 2003 University of Chicago
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Sridhar Manyem is at the University of Chicago's Graduate School of Business. For more information please visit www.gsb.uchicago.edu
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