Sector specialists in U.S. buyout and growth private equity have consistently outperformed their generalist counterparts.
Sector exposure: Cambridge Associates
studied private equity specialists – “managers that have historically invested more than 70% of their capital in one of four sectors” over the 10-year period ended Dec. 31, 2010.
Consistently better: Specialists' outperformance was consistent across all four sectors on both an internal rate of return and multiple of invested capital basis.
Long-term trend: Specialist firms generated higher multiples of invested capital in nine of 10 years compared to generalists.
Size doesn't matter:
formance among specialists was also consistent across fund sizes. The largest dispersions were among funds with less than $250 million, and those between $500 million and $750 million.
Source: Cambridge Associates
Compiled and designed by Timothy Pollard and Gregg A. Runburg