Date of Award
Spring 2024
Degree Name
Bachelor of Science (BS)
Advisor(s)
Kevin Mirabile
Abstract
The increasing popularity of private equity as an asset class has caused investors to question the validity of returns and its strength compared to traditional public asset classes. Fees and long lock-up periods require private equity firms to deliver higher returns than these traditional asset classes. This paper compares the performance of readily available leveraged ETFs to leveraged buyout private equity performance and concludes that in recent history, an investment in leveraged ETFs provides superior risk-adjusted returns to investors. This contravenes the self-reported return data of the private equity industry which indicate that its risk-adjusted returns are superior despite increased leverage. The paper thereby concludes that private equity returns benefit from smoothing due to less stringent reporting requirements, and these findings should give investors pause before choosing private equity investments over their public market counterparts.
Recommended Citation
Masic, Luka, "Replicating Private Equity Returns Using Leveraged Small-Cap ETFs" (2024). Gabelli School of Business Honors Thesis Collection. 148.
https://research.library.fordham.edu/gabelli_thesis/148
