To Roll or Not to Roll (Forward): LP NAV Estimation for Private Equity and Real Estate
Pending receipt of the GP NAVs, LPs grapple with getting a real-time NAV for risk management and rebalancing purposes. What LP method has performed the best?
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.
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Pending receipt of the GP NAVs, LPs grapple with getting a real-time NAV for risk management and rebalancing purposes. What LP method has performed the best?
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.
The long-term benefits of creating a Chief Liquidity Officer role are probably worth the effort.