- July 1, 2011: Vol. 3, Number 7

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Could You Repeat That? Analyzing Return Persistence in Opportunistic Private Equity Real Estate Funds

by Martin Rosenberg and Kurt Nye

Nearly every pitch book contains the same basic disclaimer: “Past performance is not necessarily indicative of future results.” Yet investors continue to analyze managers’ track records as one way to identify strong future performers. And managers continue to claim top-quartile performance as a way to attract capital.

Is this a worthwhile exercise? Or are there simply too many variables for fund-level performance to be useful?

This article examines those questions as they relate to opportunistic private real estate funds and concludes that 1) past fund-level performance is a useful way to efficiently narrow the field of managers being considered and 2) final manager selections must account for much more than past performance.


Our study examined the performance of 358 opportunistic private equity real estate funds. Each fund was given a quartile ranking based on its relative net IRR within its vintage. Follow-on funds were then matched w

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