Excess returns in private markets are often attributed to the extra compensation for carrying liquidity risk, but is this perception of risk warranted? We analyzed various buyout-allocation targets to find evidence for the concern.  

Private-market investors experienced a sustained slump in distributions across buyout and venture capital and, to a lesser extent, private credit. We look at the recent apparent recovery in private-market cash-flow activity and what that could mean for limited partners. 

Indexes can provide vital benchmarks for investors navigating private markets, a significant but relatively opaque investment ecosystem. We explain the hallmarks of building a foundational dataset and creating indexes that are reliable and robust. 

Our panel discusses what’s happening in public equity markets, the importance of governance and of sustainable investing more broadly, as well as the growing world of private assets, including private credit and the ways in which these assets might come to resemble their public counterparts more than they do today.

The increased use of subscription lines of credit by general partners in some private-capital funds has lifted returns by squeezing the timeframe over which returns are calculated. We examine buyout, private-credit and real-estate funds to see where the greatest inflation lay.  

Our analysis using the Burgiss Manager Universe, combined with novel analytics, suggests that venture-capital funds at the end of 2022 were close to fairly valued, and buyout-fund valuations appeared to be in line in with historical norms.  

Constructing self-financing private-capital portfolios, where distributions exceed contributions, can simplify a limited partner’s liquidity-management strategy and reduce cash drag. How could diversification help investors in this effort? 

An assessment of private-market cash flows as of June 2022 indicates mixed signals for limited partners. The prudence of maintaining a diversified portfolio is as important as ever.

Are valuations of venture-capital and buyout funds on point? Our analysis exploits the fact that fund valuations are subjective, but fund cash flows are objective, that is, distributions reveal the true value of assets, and the truth will out. 

Estimating risk in private markets presents a perennial challenge for reasons such as the low frequency of operations and irregular cash flows. We discuss the importance of risk-adjusted returns for asset allocation and present a way to gauge volatility across asset classes. 

The aggregate performance of closed- and open-end real estate funds in the U.S. was strikingly similar in recent years, despite large differences in their strategy and roles in portfolios. But did some investors gain an edge through fund selection?

We discuss the importance of constructing a benchmark for private-capital portfolios that is both accurate and informative. We address the characteristics that such a benchmark should have and recommend a pooling methodology to avoid the danger of misleading performance data. 

In this paper, we develop a methodology for single-period Brinson-style attribution of private-capital returns. We apply the methodology in two case studies — each addressing buyout, venture-capital, and real-estate funds — to demonstrate insights on the sources of returns. 

We study a deceptively simple question in private assets: At what rate should one commit capital to best achieve a specific valuation target? We formulate several algorithms that dictate the pace of commitments and quantify their performance.

Limited partners in private-capital funds must gauge how much capital to keep in reserve to meet capital calls. In this paper, we discuss this investor challenge and introduce a new concept called maximum probable contribution (MPC), which overcomes two key limitations of traditional models.