Moritz Strobel

  School of Business and Economics | Bachelor International Business 

The impact of private equity on the risk-return profile of a traditional stock and bond portfolio

Moritz's elevator pitch
The impact of private equity on the risk-return profile of a traditional stock and bond portfolio
Although private equity has grown into a $13 trillion asset class, its portfolio implications remain under-explored. This thesis investigates the impact of integrating private equity into a traditional stock and bond portfolio, adding to the limited research and highlighting the unique value that private equity investments can provide. An extensive literature review reveals that, while private equity's excess returns compared to public markets diminish when adjusted for risk factors such as size and liquidity, it can still provide significant diversification benefits that reduce portfolio volatility. The study concludes that private equity improves risk-adjusted performance as measured by the Sharpe ratio.