Submitted Abstract
This project provides a unified framework to analyze the risk and return profile of alternative investment vehicles using market-based estimates. Specifically, we extract forward-looking measures of fund alphas based on the discounts that listed funds trade at. First, we investigate a potential channel for identifying skill in the hedge fund industry through a signaling mechanism embedded in the commitment of fund managers to carry out a set of policies to control the level of the discount. Second, we investigate the role of venture capital (VC) in the reallocation of liquidity in the economy and the extent to which VC partnerships represent a counter-cyclical investor, providing capital in market downturns when liquidity is scarce. Our project aims to explore the impact of the fund structure and the underlying investor pool on the cyclicality of VC cash flows, the co-movement with the public equity market and ultimately on fund performance. Third, our study aims to address the role of public-private partnerships (P3) in the efficient allocation of capital through alternative asset classes. We focus here on infrastructure investments, where the need to bridge the infrastructure gap has called for ever increasing private participation in this sector. With our project, we investigate the performance of infrastructure funds in relation to the underlying investor pool and explore the rationale behind the flow of private capital in the sector.