Private vs. Public Investment Strategies: Reported and Real-World Performance
We estimate the real-world performance of a private strategy – different vs. the reported performance – and fairly compare it with that of a public strategy.
Given the growth in illiquid asset allocations, good portfolio liquidity management must integrate a fund’s liquidity demands and sources over a long horizon and measure the consequences of large external liquidity demands, especially in adverse markets.
A strong liquidity management role would quantify a fund’s liquidity risk across many scenarios and identify at-the-ready external liquidity facilities.
High-quality liquidity management can enhance portfolio performance by recognizing the opportunity cost of holding too much liquidity.
Reprinted with permission from the Nummer 2 2023 edition of Financial Investigator.