Machine learning study identifies eight risk factors in private equity

Allocators may be unwittingly concentrating their bets in private equity funds, research suggests


A first-of-its-kind study that used machine learning to identify eight distinct risk factors in private equity has cast doubt on the diversification strategies currently employed by asset allocators.

The yet-to-be-published research suggests investors that spread allocations across conventional ‘classifications’ of private equity strategies, such as buyout, infrastructure and venture capital funds, are unknowingly concentrating their bets.

The notion of risk factors, or varying sources of

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