Assertion Supported AI assessment confidence: 95% certainty 4/5 debate potential 4/5

Public liquid asset returns often match or beat venture capital

John Bowen · EP 316: He's The Secret Financial Consultant to Silicon Valleys Wealthiest · Jun 5, 2016 · at 13:18

Financial consultant John Bowen argues that entrepreneurs should hold diversified liquid public assets rather than illiquid private fund positions.

0:00 / 0:08exact quote · 8.2s

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“There's all kinds of academic studies that the returns are that are very comparable to the private equity venture in many cases, even better.”

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The claim, plainly

Academic studies show returns on liquid public financial assets are comparable to, and in many cases higher than, private equity and venture capital returns.

a quote alone can be ambiguous, so this restates it with the references and context of the conversation around it resolved. AI-written; the tape below the player is the source.

Assessment

The claim asserts that academic literature demonstrates that returns on liquid public financial assets are comparable to, and in many cases higher than, private equity and venture capital returns. Peer-reviewed financial economics literature published prior to and around 2016 confirms this. Seminal papers utilizing Public Market Equivalent (PME) metrics—including Kaplan & Schoar (2005, Journal of Finance), Phalippou & Gottschalg (2009, Review of Financial Studies), Phalippou (2014, Review of Finance), Harris et al. (2014, Journal of Finance), and Korteweg & Nagel (2016, Journal of Finance)—demonstrate that net-of-fee returns in private equity and venture capital are often roughly equal to broad public market benchmarks (such as the S&P 500) or underperform them once adjusted for leverage, fees, and systematic risk, particularly across post-1999 venture capital cohorts.

Kaplan & Schoar (2005) found an average net-of-fees KS-PME of ~0.96 relative to the S&P 500, showing fund returns slightly trailed public markets.
Phalippou & Gottschalg (2009) documented that mature private equity funds underperformed the S&P 500 by ~3% per year net of fees (~6% risk-adjusted).
Harris, Jenkinson, & Kaplan (2014) showed U.S. venture capital funds from 1999–2006 consistently had PME ratios below 1.0, underperforming public equities.
Korteweg & Nagel (2016) found that venture capital funds generated comparable or negative abnormal returns relative to public equity factors after the dot-com era.

Checked against

[1] repec.org [2] mit.edu [3] chicagobooth.edu [4] commonfund.org [5] netspar.nl [6] chicagobooth.edu [7] oup.com [8] repec.org

academic studies private equity venture capital underperform public equity PME Kaplan Phalippou Kaplan Schoar 2005 private equity returns public market equivalent S P 500 Phalippou Gottschalg 2009 private equity performance Journal of Finance Korteweg Nagel 2016 "Risk-Adjusting the Returns to Venture Capital" Journal of Finance Robinson Sensoy 2016 "Do private equity fund managers" Journal of Financial Economics Harris Jenkinson Kaplan 2014 private equity performance Journal of Finance

assessed as of 2026-09-02

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Mentioned

liquid financial assets private equity venture capital

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Public liquid asset returns often match or beat venture capital

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