Can The Private Equity Funds Really Beat The Public Equity Funds?

In recent years,with the continuous development of China’s economy,the development of the fund market is gradually mature,more and more investors participate in it,public and private funds have also developed into an important part of the domestic capital market.With the increase in the number of fund products,the competition between different types of funds is extremely severe,and the performance between private funds and public funds has attracted a lot of attention.Therefore,this paper tries to make a comparative analysis of the differences between the two types of funds,so as to help investors to choose suitable fund products.Based on equity funds as the research object,this paper compares the performance differences of the two types of funds from static,dynamic risk and risk factor model three aspects.Meanwhile,this paper also tries to deeply analyze the reasons behind better fund performance,since private equity funds do not need to strictly disclose all the information during the fund’s operation,then this paper can only study the impact of fund size and survivor bias on fund performance.In the empirical process,this paper constructs equal value and equal weight portfolios respectively to compare the differences of funds.Due to the complexity of private funds data,this paper deals with it strictly according to several principles,and finally obtains a relatively objective sample database.The conclusions of this paper include:(1)The results of performance evaluation indicators from three perspectives all show that private equity funds can indeed beat public equity funds;(2)During the study period,both types of funds have certain performance continuity,but the performance continuity of private funds is significantly better than that of public funds;(3)Fund size is positively correlated with performance,so fund size is not the reason for the outstanding performance of private funds.On the contrary,the survivor bias effect is positive.When the vanishing funds are included in the sample of private funds,the performance of private funds is worse than that of public funds,indicating that the existence of the survivor bias will make the performance of private funds overvalued.Finally,this paper qualitatively analyzes the shortcomings of private funds in information disclosure,and puts forward research enlightenment according to the empirical results.