Professional Documents
Culture Documents
May 2015
A research study* conducted by Prof Oliver Gottschalg (HEC Paris and PERACS) and
Dr Ralf Gleisberg and Ramun Derungs (Akina).
*The comprehensive research study can be requested by contacting Dr Ralf Gleisberg (ralf.gleisberg@akinapartners.com)
Executive Summary
-
Small/mid-cap funds consistently outperform large-cap portfolios (both in EU and in the US)
European portfolios with broader return dispersion than North American portfolios
6x
7x
6.0x
5x
TVPI
4x
3x
2.6x
2x
3
1.2x
1x
1
0x
0.02x
10
15
20
25
30
50
100
1
2
3
Selection ability has (not surprisingly) an huge impact on the average performance
Worst upper portfolio returns more than the average of lower portfolios (e.g. 1.52x vs. 1.21x)
Worst upper portfolio performance improves from 1.52x to 1.80x through diversification
European portfolios with broader return dispersion than North American portfolios
The average returns of the primary funds in the subsamples from Europe and North America are very
similar. However, the dispersion of returns is greater across European funds than for the North
American peers allowing the European funds to outperform. Adding further funds to the portfolio leads
not only to a convergence of the worst performing European to the North American portfolios but also
results in higher best performing portfolios of European funds. For instance, increasing the number of
underlying primary funds to 15 increases the bottom portfolio to 1.26x in both regions. However, the
best performing portfolio is meaningfully higher in Europe than in North America (2.47x vs. 2.36x).
1
2
3
1
2
3
1
2
The above mentioned results left us wondering whether the superiority of an optimally diversified
small/mid-cap portfolio is specific to funds of a certain return category. So we replicated the analysis
separately for subsamples of funds with above- and below-average returns. Interestingly, our results
illustrate that indeed this particular relationship seems to be specific to the better performing funds. In
case an investors selection ability is below-average a concentrated portfolio of few large funds is
superior in terms of the average return. However, from risk perspective a diversified small/mid-cap
portfolio looks still more favourable.
Selection skills lead to stronger outperformance and lower risk
1
2
3
The results of the research get confirmed when looking at European funds only. An optimally
diversified European small/mid-cap portfolio is less risky than a concentrated European large-cap
portfolio and performs better in terms of both average and peak returns.
Looking at Europe only
1
2
3
Optimally diversified European small/mid-cap portfolio is not only (slightly) less risky
but performs better both on average (2.27x vs. 1.92x)
and with superior peak performance (3.11x vs. 2.48x)
Dr Ralf Gleisberg
Akina Ltd
+
T: 41 44 220 16 08
E: ralf.gleisberg@akinapartners.com
Dr Ralf Gleisberg is a Partner of Akina. He is responsible for advising on fund investments in
the Benelux and the Nordic countries. He is member of the advisory board of several private
equity funds across Europe. In addition, Ralf has been instrumental in setting up the portfolio
monitoring for Akina advised investment vehicles. He holds a Masters Degree in Economics
from the University of Freiburg (D) and from the University of Michigan at Ann Arbor (USA)
and a Ph.D. degree in Finance from Basel University (CH).
Ramun Derungs
Akina Ltd
+
T: 41 44 220 16 20
E: ramun.derungs@akinapartners.com
Ramun Derungs joined Akina in March 2014 as an Associate. His main responsibilities are to
provide support to the marketing and investor relations front staff. He holds a Master of
Science in Banking & Finance from the Zurich University of Applied Sciences.
About Akina
The Akina Group offers European private equity funds focusing on investing into small and medium size businesses through its
alternative investment manager, Akina (Luxembourg) S.A. and its adviser, Akina Ltd. Since 1999, the Euro Choice flagship
programmes and mandates have attracted over EUR 2.0 billion (USD 2.1 billion) from well over 100 qualified investors around
the globe. The Akina team combines a broad fund and direct investment expertise.
Akina was awarded the Gold Award (2011) and the Silver Award (2012, 2013 and 2014) for best regional investment strategy
by Private Equity Exchange & Awards.
Akina (Luxembourg) S.A. is an alternative investment fund manager (AIFM) registered with the Luxembourg Commission de
Surveillance du Secteur Financier (CSSF). Akina Ltd is an investment adviser registered with the U.S. Securities and Exchange
Commission (SEC). Akina is a signatory to the Principles for Responsible Investment (PRI).
www.akinapartners.com