• Josh Lerner


September 16, 2021, Paper: "Black- and Hispanic-owned funds control a very modest share of assets in the private capital industry and encounter difficulties in raising first-time funds, despite the fact that their performance is indistinguishable from other funds’ returns. We explore this seeming paradox. We find that the size of the follow-on funds raised by minority managers is less sensitive to the performance of the previous fund than that of other private capital groups. The sensitivity of inflows to performance increases sharply during periods of high racial awareness. We also document minority-owned groups’ difficulty in raising first-time funds. Together, the results support the hypothesis that the limited representation of Black- and Hispanic-owned firms in private capital stems at least partially from the nature of investor demand, rather than the supply of available fund managers." Read PDF

Non-HKS Author Website - Josh Lerner