Table 4 reports the cutoffs for each quartile in each decade. For direct investments, prior to 1990, size quartiles were relatively stable across decades, the cutoff for the bottom quartile ranging from $0.29 million to $0.35 million and for the top quartile from $2.00 million to $2.34 million. Average direct investment size rose considerably in subsequent decades, the bottom quartile cutoff rising to $0.47 million in 1990-1999, $1.56 million in 2000-2009, and $3.91 million in 2010-2019. This growth in average investment size is much more than could be explained by inflation. The share of large investments also increased substantially, the top quartile cutoff rising to $5.48 million in 1990-1999, $14.56 million in 2000-2009, and $24.00 million in 2010-2019. The IFC’s portfolio therefore reflects a combination of different investment sizes, some on the scale of those executed by large private equity funds and others more on the scale of venture capital investments. For fund investments, investments in the bottom and top quartile are generally larger than for direct investments, but with a similar pattern of increasing investment size over time.

Panel B of Table 4 reports the PME for direct and fund investment portfolios constructed by pooling cash flows from all investments in the same size quartile, the quartiles as defined by the cutoffs in Panel A.<sup>18</sup> This ensures that whether an investment is classified as “small” or “large” is defined relative to the time period. The first column of data reports the total PME, pooling all cash flows. Subsequent columns report the median, average, standard error of the average, and standard deviation. For direct investments, looking at the total PME, there is no clear pattern in returns across size quartiles: the portfolio of the smallest (1st quartile) investments has a PME = 1.41, higher than for the overall portfolio; the largest (4th quartile) investments perform similarly with a PME = 1.39. Looking at averages, however, there is a pattern, albeit non-monotonic, that smaller investments do better. The average PME of the 1st quartile is 4.52, the 2nd quartile 2.61, the 3rd quartile 1.09, and the 4th quartile 1.46. Using the standard errors, Welch’s test rejects at the 1 percent significance level that the 1st and 4th quartile have equal average returns. These results contrast somewhat with the findings of Harris et al. (2014), who find that in advanced economies leveraged buyout funds, which typically do larger deals, have higher average returns than venture capital funds, which do smaller deals. However, Harris et al. do not report information that would enable us to evaluate differences in sector compositions between our sample and theirs.

Looking at fund investments, there is a similar pattern that the smallest investments yield larger average returns than the largest investments; this difference is not statistically significant at standard levels. This may reflect the lack of a strong relationship between the IFC’s interest in a fund and the size of deals the fund does, though the data do not include information on fund size (or the size of investees receiving direct investment) so we cannot verify this hypothesis directly.

> 18Table A7 reports results for the IRR.

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