{"product_id":"the-art-of-commitment-pacing-isbn-9781394159604","title":"The Art of Commitment Pacing","description":"\u003cp\u003e\u003cb\u003eAdvanced guidance for institutional investors, academics, and researchers on how to manage a portfolio of private capital funds\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Art of Commitment Pacing: Engineering Allocations to Private Capital\u003c\/i\u003e provides a much-needed analysis of the issues that face investors as they incorporate closed ended-funds targeting illiquid private assets (such as private equity, private debt, infrastructure, real estate) into their portfolios. These private capital funds, once considered \"alternative\" and viewed as experimental, are becoming an increasingly standard component of institutional asset allocations.  \u003c\/p\u003e \u003cp\u003eHowever, many investors still follow management approaches that remain anchored in the portfolio theory for liquid assets but that often lead to disappointing results when applied to portfolios of private capital funds where practically investors remain committed over nearly a decade.  \u003c\/p\u003e \u003cp\u003eWhen planning for such commitments, investment managers and researchers are faced with practical questions such as:  \u003c\/p\u003e \u003cul\u003e \u003cli\u003eHow to measure and control the real exposure to private assets? \u003c\/li\u003e \u003cli\u003eHow to forecast cash-flows for commitments to private capital funds?  \u003c\/li\u003e \u003cli\u003eWhat ranges for their returns and lifetime are realistic, and how can the investor’s skill be factored in?  \u003c\/li\u003e \u003cli\u003eOver which dimensions should a portfolio be diversified and how much diversification is enough? \u003c\/li\u003e \u003cli\u003eHow can the impact of co-investments or secondaries be modelled? \u003c\/li\u003e \u003cli\u003eHow to design pacing plans that lead to resilient and efficient portfolios? \u003c\/li\u003e \u003cli\u003eWhat stress scenarios should be considered and how can they be applied? \u003c\/li\u003e \u003c\/ul\u003e \u003cp\u003e\u003cbr\u003eThese are just examples of the many questions for which answers are provided. \u003ci\u003eThe Art of Commitment Pacing\u003c\/i\u003e describes established and new methodologies for building up and controlling allocations to such investments. This book offers a systematic approach for building up and controlling allocations to such investments. \u003c\/p\u003e \u003cp\u003e\u003ci\u003eThe Art of Commitment Pacing\u003c\/i\u003e is a valuable addition to the libraries of investment managers, as well as portfolio and risk managers involved in institutional investment. The book will also be of interest to advanced students of finance, researchers, and other practitioners who require a detailed understanding of forecasting and portfolio management methodologies. \u003c\/p\u003e \u003cp\u003eAcknowledgments xiii\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 1 Introduction 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eScope of the book 1\u003c\/p\u003e \u003cp\u003eQuick glossary 2\u003c\/p\u003e \u003cp\u003eThe challenge of private capital 2\u003c\/p\u003e \u003cp\u003eRisk and uncertainty 3\u003c\/p\u003e \u003cp\u003eWhy do we need commitment pacing? 4\u003c\/p\u003e \u003cp\u003eIlliquidity 4\u003c\/p\u003e \u003cp\u003eThe siren song of the secondary market 4\u003c\/p\u003e \u003cp\u003eHow does commitment pacing work? 5\u003c\/p\u003e \u003cp\u003eSignificant allocations needed 7\u003c\/p\u003e \u003cp\u003eMulti‐asset‐class allocations 8\u003c\/p\u003e \u003cp\u003eIntra‐asset‐class diversification 8\u003c\/p\u003e \u003cp\u003eEngineering a resilient portfolio 9\u003c\/p\u003e \u003cp\u003eOrganisation of the book 10\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 2 Institutional Investing in Private Capital 15\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLimited partnerships 15\u003c\/p\u003e \u003cp\u003eStructure 16\u003c\/p\u003e \u003cp\u003eCriticism 18\u003c\/p\u003e \u003cp\u003eCosts of intermediation 18\u003c\/p\u003e \u003cp\u003eInefficient fund raising 18\u003c\/p\u003e \u003cp\u003eAddressing uncertainty 19\u003c\/p\u003e \u003cp\u003eConclusion 19\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 3 Exposure 21\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eExposure definition 21\u003c\/p\u003e \u003cp\u003eLayers of investment 23\u003c\/p\u003e \u003cp\u003eNet asset value 23\u003c\/p\u003e \u003cp\u003eUndrawn commitments 24\u003c\/p\u003e \u003cp\u003eCommitment risk 24\u003c\/p\u003e \u003cp\u003eTiming 24\u003c\/p\u003e \u003cp\u003eClassification 25\u003c\/p\u003e \u003cp\u003eExposure measures – LP’s perspective 25\u003c\/p\u003e \u003cp\u003eCommitment 26\u003c\/p\u003e \u003cp\u003eCommitment minus capital repaid 26\u003c\/p\u003e \u003cp\u003eRepayment‐age‐adjusted commitment 27\u003c\/p\u003e \u003cp\u003eExposure measures – fund manager’s perspective 28\u003c\/p\u003e \u003cp\u003eIpev Nav 28\u003c\/p\u003e \u003cp\u003eIPEV NAV plus uncalled commitments 29\u003c\/p\u003e \u003cp\u003eRepayment‐age‐adjusted accumulated contributions 30\u003c\/p\u003e \u003cp\u003eSummary and conclusion 31\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 4 Forecasting Models 37\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eBootstrapping 37\u003c\/p\u003e \u003cp\u003eMachine learning 38\u003c\/p\u003e \u003cp\u003eTakahashi–Alexander model 40\u003c\/p\u003e \u003cp\u003eModel dynamics 40\u003c\/p\u003e \u003cp\u003eStrengths and weaknesses 46\u003c\/p\u003e \u003cp\u003eVariations and extensions 47\u003c\/p\u003e \u003cp\u003eStochastic models 49\u003c\/p\u003e \u003cp\u003eStochastic modelling of contributions, distributions, and NAVs 49\u003c\/p\u003e \u003cp\u003eComparison 50\u003c\/p\u003e \u003cp\u003eConclusion 51\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 5 Private Market Data 53\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eFund peer groups 53\u003c\/p\u003e \u003cp\u003eOrganisation of benchmarking data 53\u003c\/p\u003e \u003cp\u003eBailey criteria 54\u003c\/p\u003e \u003cp\u003eData providers 55\u003c\/p\u003e \u003cp\u003eBusiness model 55\u003c\/p\u003e \u003cp\u003ePublic route 55\u003c\/p\u003e \u003cp\u003eVoluntary provision 56\u003c\/p\u003e \u003cp\u003eProblem areas 56\u003c\/p\u003e \u003cp\u003eBiases 57\u003c\/p\u003e \u003cp\u003eSurvivorship bias 57\u003c\/p\u003e \u003cp\u003eSurvivorship bias in private markets 58\u003c\/p\u003e \u003cp\u003eImpact 58\u003c\/p\u003e \u003cp\u003eConclusion 59\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 6 Augmented TAM – Outcome Model 61\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eFrom TAM to stochastic forecasts 61\u003c\/p\u003e \u003cp\u003eUse cases for stochastic cash‐flow forecasts 62\u003c\/p\u003e \u003cp\u003eFunding risk 62\u003c\/p\u003e \u003cp\u003eMarket risk 65\u003c\/p\u003e \u003cp\u003eLiquidity risk 65\u003c\/p\u003e \u003cp\u003eCapital risk 66\u003c\/p\u003e \u003cp\u003eModel architecture 66\u003c\/p\u003e \u003cp\u003eOutcome model 67\u003c\/p\u003e \u003cp\u003ePattern model 67\u003c\/p\u003e \u003cp\u003ePortfolio model 68\u003c\/p\u003e \u003cp\u003eSystem considerations 68\u003c\/p\u003e \u003cp\u003eSemi‐deterministic TAM 68\u003c\/p\u003e \u003cp\u003eAdjusting ranges for lifetime and TVPI 70\u003c\/p\u003e \u003cp\u003eRanges for fund lifetimes 71\u003c\/p\u003e \u003cp\u003eRanges for fund TVPIs 73\u003c\/p\u003e \u003cp\u003ePicking samples 76\u003c\/p\u003e \u003cp\u003eConstructing PDF for TVPI based on private market data 78\u003c\/p\u003e \u003cp\u003eA1*TAM results 82\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 7 Augmented TAM – Pattern Model 85\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eA2*tam 86\u003c\/p\u003e \u003cp\u003eReactiveness of model 86\u003c\/p\u003e \u003cp\u003eModel overview 87\u003c\/p\u003e \u003cp\u003eChanging granularity 89\u003c\/p\u003e \u003cp\u003eInjecting randomness 89\u003c\/p\u003e \u003cp\u003eSetting frequency of cash flows 90\u003c\/p\u003e \u003cp\u003eSetting volatility for contributions 92\u003c\/p\u003e \u003cp\u003eSetting volatility for distributions 94\u003c\/p\u003e \u003cp\u003eScaling and re‐ picking cash‐ flow samples 94\u003c\/p\u003e \u003cp\u003eConvergence A2*TAM to TAM 95\u003c\/p\u003e \u003cp\u003eSplit cash flows in components 97\u003c\/p\u003e \u003cp\u003eFees 98\u003c\/p\u003e \u003cp\u003eFixed returns 102\u003c\/p\u003e \u003cp\u003eCash‐ flow‐ consistent NAV 103\u003c\/p\u003e \u003cp\u003ePrincipal approach 103\u003c\/p\u003e \u003cp\u003eFirst contributions, then distributions 103\u003c\/p\u003e \u003cp\u003eForward pass 104\u003c\/p\u003e \u003cp\u003eBackward pass 104\u003c\/p\u003e \u003cp\u003eCombination 104\u003c\/p\u003e \u003cp\u003eSummary 105\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 8 Modelling Avenues into Private Capital 109\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003ePrimary commitments 109\u003c\/p\u003e \u003cp\u003eModelling fund strategies 110\u003c\/p\u003e \u003cp\u003eParameter as suggested by Takahashi and Alexander (2002) 110\u003c\/p\u003e \u003cp\u003eFurther findings on parameters 113\u003c\/p\u003e \u003cp\u003eBasing parameters on comparable situations 113\u003c\/p\u003e \u003cp\u003eFunds of funds 114\u003c\/p\u003e \u003cp\u003eSecondary buys 114\u003c\/p\u003e \u003cp\u003eSecondary FOFs 116\u003c\/p\u003e \u003cp\u003eCo‐investments 118\u003c\/p\u003e \u003cp\u003eBasic approach 118\u003c\/p\u003e \u003cp\u003eCo‐investment funds 119\u003c\/p\u003e \u003cp\u003eSyndication 119\u003c\/p\u003e \u003cp\u003eSide funds 119\u003c\/p\u003e \u003cp\u003eImpact on portfolio 120\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 9 Modelling Diversification for Portfolios of Limited Partnership Funds 123\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe LP diversification measurement problem 123\u003c\/p\u003e \u003cp\u003eFund investments 124\u003c\/p\u003e \u003cp\u003eDiversification or skills? 124\u003c\/p\u003e \u003cp\u003eAspects of diversification 125\u003c\/p\u003e \u003cp\u003eA (non‐ESG‐compliant) analogy 125\u003c\/p\u003e \u003cp\u003eCommitment efficiency 126\u003c\/p\u003e \u003cp\u003eExposure efficiency 126\u003c\/p\u003e \u003cp\u003eOutcome assessment 126\u003c\/p\u003e \u003cp\u003eDiversifying commitments 127\u003c\/p\u003e \u003cp\u003eAssigning funds to clusters 127\u003c\/p\u003e \u003cp\u003eDiversification dimensions 128\u003c\/p\u003e \u003cp\u003eSelf‐proclaimed definitions 128\u003c\/p\u003e \u003cp\u003eMarket practices 128\u003c\/p\u003e \u003cp\u003eThe importance of diversification over vintage years 129\u003c\/p\u003e \u003cp\u003eOther dimensions and their impact on risks 129\u003c\/p\u003e \u003cp\u003eInclude currencies? 130\u003c\/p\u003e \u003cp\u003eDefinitions 131\u003c\/p\u003e \u003cp\u003eStyles 131\u003c\/p\u003e \u003cp\u003eClassification groups 132\u003c\/p\u003e \u003cp\u003eStyle drifts 133\u003c\/p\u003e \u003cp\u003eRobustness of classification schemes 133\u003c\/p\u003e \u003cp\u003eModelling vintage year impact 134\u003c\/p\u003e \u003cp\u003eCommitment efficiency 135\u003c\/p\u003e \u003cp\u003eImportance of clusters 135\u003c\/p\u003e \u003cp\u003ePartitioning into clusters 136\u003c\/p\u003e \u003cp\u003eMeasurement approach 137\u003c\/p\u003e \u003cp\u003eRemarks 139\u003c\/p\u003e \u003cp\u003eMobility barriers 139\u003c\/p\u003e \u003cp\u003eSimilarity is a measure for barriers to switching between classes 140\u003c\/p\u003e \u003cp\u003eSimilarity is not correlation 140\u003c\/p\u003e \u003cp\u003eIs there an optimum diversification? 141\u003c\/p\u003e \u003cp\u003eHow many funds? 141\u003c\/p\u003e \u003cp\u003eCosts of diversification 141\u003c\/p\u003e \u003cp\u003eHow to set a ‘satisficing’ number of funds? 143\u003c\/p\u003e \u003cp\u003ePortfolio impact 143\u003c\/p\u003e \u003cp\u003eCommitment efficiency timeline 143\u003c\/p\u003e \u003cp\u003ePortfolio‐level forecasts 143\u003c\/p\u003e \u003cp\u003eAppendix A – Determining similarities 145\u003c\/p\u003e \u003cp\u003eAppendix B – Geographical similarities 146\u003c\/p\u003e \u003cp\u003eGeographical diversification for private capital 146\u003c\/p\u003e \u003cp\u003eRegional groups 146\u003c\/p\u003e \u003cp\u003eTrade blocs 147\u003c\/p\u003e \u003cp\u003eTransport way connection 148\u003c\/p\u003e \u003cp\u003eLanguage barriers 148\u003c\/p\u003e \u003cp\u003eLimits to geography as diversifier 148\u003c\/p\u003e \u003cp\u003eAppendix C – Multi‐strategies and others 149\u003c\/p\u003e \u003cp\u003eAppendix D – Industry sector similarities 149\u003c\/p\u003e \u003cp\u003eAppendix E – Strategy similarities 149\u003c\/p\u003e \u003cp\u003eAppendix F – Fund management firm similarities 150\u003c\/p\u003e \u003cp\u003eAppendix G – Investment stage similarities 151\u003c\/p\u003e \u003cp\u003eAppendix H – Fund size similarities 152\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 10 Model Input Data 155\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eCategorical input data 155\u003c\/p\u003e \u003cp\u003ePerceptions 156\u003c\/p\u003e \u003cp\u003eRegulation 156\u003c\/p\u003e \u003cp\u003eRisk managers 157\u003c\/p\u003e \u003cp\u003eCan data be objective? 157\u003c\/p\u003e \u003cp\u003eMoving from weak to strong data 158\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 11 Fund Rating\/Grading 161\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003ePrivate capital funds and ratings 161\u003c\/p\u003e \u003cp\u003eFiduciary ratings 161\u003c\/p\u003e \u003cp\u003eFund rankings 162\u003c\/p\u003e \u003cp\u003eInternal rating systems 162\u003c\/p\u003e \u003cp\u003eFurther literature 163\u003c\/p\u003e \u003cp\u003ePrivate capital fund gradings 163\u003c\/p\u003e \u003cp\u003eScope and limitations 163\u003c\/p\u003e \u003cp\u003eSelection skill model 164\u003c\/p\u003e \u003cp\u003eAssumptions for grading 165\u003c\/p\u003e \u003cp\u003ePrototype fund grading system 165\u003c\/p\u003e \u003cp\u003eEx‐ante weights 166\u003c\/p\u003e \u003cp\u003eExpectation grades 166\u003c\/p\u003e \u003cp\u003eRisk grades 169\u003c\/p\u003e \u003cp\u003eQuantification 171\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 12 Qualitative Scoring 173\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eObjectives and scope 173\u003c\/p\u003e \u003cp\u003eRelevant dimensions 174\u003c\/p\u003e \u003cp\u003eInvestment style 175\u003c\/p\u003e \u003cp\u003eManagement team 176\u003c\/p\u003e \u003cp\u003eFund terms 177\u003c\/p\u003e \u003cp\u003eLiquidity and exits 178\u003c\/p\u003e \u003cp\u003eIncentive structure 178\u003c\/p\u003e \u003cp\u003eAlignment and conflicts of interest 180\u003c\/p\u003e \u003cp\u003eIndependence of decision‐making 181\u003c\/p\u003e \u003cp\u003eViability 181\u003c\/p\u003e \u003cp\u003eConfirmation 182\u003c\/p\u003e \u003cp\u003eScoring method 183\u003c\/p\u003e \u003cp\u003eTallying 183\u003c\/p\u003e \u003cp\u003eResearching practices 184\u003c\/p\u003e \u003cp\u003eEx‐post monitoring 184\u003c\/p\u003e \u003cp\u003eAssigning grades 185\u003c\/p\u003e \u003cp\u003eAppendix – Search across several private market data providers 186\u003c\/p\u003e \u003cp\u003eInteroperability 186\u003c\/p\u003e \u003cp\u003eMatching 187\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 13 Quantification Based on Fund Grades 191\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eGrading process 191\u003c\/p\u003e \u003cp\u003eQuartiling 191\u003c\/p\u003e \u003cp\u003eQuantiles 192\u003c\/p\u003e \u003cp\u003eQuartiling 193\u003c\/p\u003e \u003cp\u003eApproach 194\u003c\/p\u003e \u003cp\u003eExample – how tall will she be? 195\u003c\/p\u003e \u003cp\u003eProbabilistic statement 196\u003c\/p\u003e \u003cp\u003eControlling convergence 196\u003c\/p\u003e \u003cp\u003eLP selection skills 198\u003c\/p\u003e \u003cp\u003eImpact of risk grade 201\u003c\/p\u003e \u003cp\u003eTVPI sampling 203\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 14 Bottom- up Approach to Forecasting 205\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLook‐ through 205\u003c\/p\u003e \u003cp\u003eRegulation 205\u003c\/p\u003e \u003cp\u003eFund ratings 206\u003c\/p\u003e \u003cp\u003eLook‐ through in practice 206\u003c\/p\u003e \u003cp\u003eBottom‐ up 207\u003c\/p\u003e \u003cp\u003eStochastic bottom‐ up models 207\u003c\/p\u003e \u003cp\u003eMachine‐ learning‐ based bottom‐ up models 207\u003c\/p\u003e \u003cp\u003eOverrides 208\u003c\/p\u003e \u003cp\u003eInvestment intelligence 208\u003c\/p\u003e \u003cp\u003eAdvantages and restrictions 208\u003c\/p\u003e \u003cp\u003eTreatment as exceptions 209\u003c\/p\u003e \u003cp\u003eIntegration of overrides in forecasts by a top‐ down model 209\u003c\/p\u003e \u003cp\u003eProbabilistic bottom‐ up 211\u003c\/p\u003e \u003cp\u003eExpert knowledge for probability density functions? 212\u003c\/p\u003e \u003cp\u003eEstimating ranges 212\u003c\/p\u003e \u003cp\u003eCombining top‐ down with bottom‐ up 214\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 15 Commitment Pacing 217\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eDefining a pacing plan 217\u003c\/p\u003e \u003cp\u003ePacing phases 218\u003c\/p\u003e \u003cp\u003eRamp‐up phase 219\u003c\/p\u003e \u003cp\u003eMaintenance phase 219\u003c\/p\u003e \u003cp\u003eRamp‐down phase 220\u003c\/p\u003e \u003cp\u003eControlling allocations 221\u003c\/p\u003e \u003cp\u003eSimulating the pacing plan 221\u003c\/p\u003e \u003cp\u003eRatio‐based commitment rules 222\u003c\/p\u003e \u003cp\u003eDynamic commitments 222\u003c\/p\u003e \u003cp\u003ePacing plan outcomes 222\u003c\/p\u003e \u003cp\u003e‘Slow and steady’ 223\u003c\/p\u003e \u003cp\u003eAccelerated pacing plan 223\u003c\/p\u003e \u003cp\u003eLiquidity constraints 224\u003c\/p\u003e \u003cp\u003eImpact on cash‐flow profile 224\u003c\/p\u003e \u003cp\u003eImpact of commitment types 225\u003c\/p\u003e \u003cp\u003eMaintenance phase 228\u003c\/p\u003e \u003cp\u003eRecommitments 229\u003c\/p\u003e \u003cp\u003eTarget NAV 229\u003c\/p\u003e \u003cp\u003eCash‐flow matching 230\u003c\/p\u003e \u003cp\u003eAdditional objectives and constraints 231\u003c\/p\u003e \u003cp\u003eCommit to high‐quality funds 231\u003c\/p\u003e \u003cp\u003eAchieve intra‐asset diversification 231\u003c\/p\u003e \u003cp\u003eMinimise opportunity costs 233\u003c\/p\u003e \u003cp\u003eSatisficing portfolios 233\u003c\/p\u003e \u003cp\u003eConclusion 234\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 16 Stress Scenarios 235\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eMake forecasts more robust 235\u003c\/p\u003e \u003cp\u003eCommunication 235\u003c\/p\u003e \u003cp\u003eSpecific to portfolio 236\u003c\/p\u003e \u003cp\u003eImpact of ‘Black Swans’ 236\u003c\/p\u003e \u003cp\u003eInterest rates and inflationary periods 237\u003c\/p\u003e \u003cp\u003eModelling crises 238\u003c\/p\u003e \u003cp\u003eDelay of new commitments 238\u003c\/p\u003e \u003cp\u003eChanges in contribution rates 238\u003c\/p\u003e \u003cp\u003eChanges in distributions 239\u003c\/p\u003e \u003cp\u003eNAV impact and secondary transactions 240\u003c\/p\u003e \u003cp\u003eLessons 240\u003c\/p\u003e \u003cp\u003eBuilding stress scenarios 241\u003c\/p\u003e \u003cp\u003eMarket replay 241\u003c\/p\u003e \u003cp\u003eVarying outcomes 242\u003c\/p\u003e \u003cp\u003eForeign exchange rates 244\u003c\/p\u003e \u003cp\u003eVarying portfolio dependencies 244\u003c\/p\u003e \u003cp\u003eIncreasing and decreasing outcome dependencies 244\u003c\/p\u003e \u003cp\u003eIncreasing and decreasing cash‐flow dependencies 247\u003c\/p\u003e \u003cp\u003eBlanking out periods of distributions 247\u003c\/p\u003e \u003cp\u003eVarying patterns 248\u003c\/p\u003e \u003cp\u003eStressing commitments 249\u003c\/p\u003e \u003cp\u003eExtending and shortening of fund lifetimes 250\u003c\/p\u003e \u003cp\u003eFront‐loading and back‐loading of cash flows 251\u003c\/p\u003e \u003cp\u003eForeign exchange rates and funding risk 251\u003c\/p\u003e \u003cp\u003eIncreasing and decreasing frequency of cash flows 253\u003c\/p\u003e \u003cp\u003eIncreasing and decreasing volatility of cash flows 254\u003c\/p\u003e \u003cp\u003eConclusion 256\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 17 The Art of Commitment Pacing 259\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eImproved information technology 259\u003c\/p\u003e \u003cp\u003eDirect investments 260\u003c\/p\u003e \u003cp\u003eUse of artificial intelligence 260\u003c\/p\u003e \u003cp\u003eRisk of private equity 261\u003c\/p\u003e \u003cp\u003eSecuritisations 261\u003c\/p\u003e \u003cp\u003eJudgement, engineering, and art 262\u003c\/p\u003e \u003cp\u003eAbbreviations 263\u003c\/p\u003e \u003cp\u003eGlossary 267\u003c\/p\u003e \u003cp\u003eBiography 275\u003c\/p\u003e \u003cp\u003eBibliography 277\u003c\/p\u003e \u003cp\u003eIndex 289\u003c\/p\u003e  \u003cp\u003e \u003cb\u003eTHOMAS MEYER, \u003c\/b\u003e is the co-author of \u003ci\u003eBeyond the J Curve \u003c\/i\u003e(translated into Chinese, Japanese, and Vietnamese), \u003ci\u003eJ Curve Exposure\u003c\/i\u003e, \u003ci\u003eMastering Illiquidity \u003c\/i\u003e(all by Wiley), and two CAIA books, which are required reading for Level II of the Chartered Alternative Investment Analyst ® Program. He authored \u003ci\u003ePrivate Equity Unchained \u003c\/i\u003e(by Palgrave MacMillan).   \u003c\/p\u003e\u003cp\u003e Advanced guidance for institutional investors, academics, and researchers on how to construct portfolios of private capital funds.  \u003c\/p\u003e\u003cp\u003e\u003ci\u003eThe Art of Commitment Pacing: Engineering Allocations to Private Capital \u003c\/i\u003eprovides a much-needed analysis of the issues that face investors as they incorporate closed ended-funds targeting illiquid private assets (such as private equity, private debt, infrastructure, real estate) into their portfolios. These private capital funds, once considered ‘alternative’ and viewed as experimental, are becoming an increasingly standard component of institutional asset allocations.  \u003c\/p\u003e\u003cp\u003eHowever, many investors still follow management approaches that remain anchored in the portfolio theory for liquid assets but that often lead to disappointing results when applied to portfolios of private capital funds where practically investors remain committed over nearly a decade.  \u003c\/p\u003e\u003cp\u003e\u003ci\u003eThe Art of Commitment Pacing \u003c\/i\u003eoffers a systematic approach for building up and controlling allocations to such investments.   \u003c\/p\u003e\u003cp\u003e\u003cb\u003e\u003csmall\u003ePRAISE FOR\u003c\/small\u003e \u003cbr\u003e THE ART OF COMMITMENT PACING\u003c\/b\u003e \u003c\/p\u003e\u003cp\u003e “Every institutional investor should read Meyer’s \u003ci\u003eThe Art of Commitment Pacing\u003c\/i\u003e, the only book systematically discussing the challenges in allocating to private capital, a lumpy, illiquid, and opaque asset class. Meyer eloquently provides state-of-the-art practical solutions to help asset allocators build up and maintain allocations to private assets. This book is an essential guide to an institutional asset allocator’s most important decision.” \u003cbr\u003e \u003cb\u003e—Hossein Kazemi,\u003c\/b\u003e Ph.D., CFA, Philipp Professor of Finance at Isenberg School of Management, Editor of the Journal of Alternative Investments, and Senior Advisor to the CAIA Association and the FDP Institute  \u003c\/p\u003e\u003cp\u003e“Private markets are now a staple of institutional asset allocations. As a result, fundamental questions have come to the fore that academic literature has fallen short of addressing. Thomas Meyer offers practical solutions, the perfect mix of theoretical and practical insights, in a series of synthetic and accessible chapters for knowledgeable practitioners. This is well-invested time that will pay off over the long term.” \u003cbr\u003e \u003cb\u003e—Cyril Demaria,\u003c\/b\u003e Head of Private Market Strategy at Julius Bär, Affiliate Professor at EDHEC, Author of Asset Allocation and Private Markets, and Introduction to Private Equity, Debt and Real Assets  \u003c\/p\u003e\u003cp\u003e“This book is a game-changer for investors in private capital, offering unprecedented insights and practical models to master commitment pacing and risk management.” \u003cbr\u003e \u003cb\u003e—Jason Scharfman,\u003c\/b\u003e Managing Partner Corgentum Consulting.  \u003c\/p\u003e\u003cp\u003e“Thomas has condensed the art and science of commitment pacing into a rigorous yet pragmatic guide, filling a huge gap in the finance literature - a must read for all LPs.” \u003cbr\u003e \u003cb\u003e—Andrea Carnelli Dompé, PhD. CEO \u0026amp; Co-founder - Tamarix Technologies \u003c\/b\u003e \u003c\/p\u003e\u003cp\u003e“Commitment pacing is one of the hidden gems in the toolbox of every private equity fund manager. Historically it has lagged in terms of research and literature focus versus fund manager selection or due diligence. Thomas Meyer levels the playing field by focusing on this often overlooked subject. If you want to move from simplistic commitment pacing models to rigorous forecasting in a portfolio of private equity funds, this is a book for you.” \u003cbr\u003e \u003cb\u003e—Ignacio Larrú Martínez, General Partner at Kanoar Ventures SGEIC, SA \u003c\/b\u003e \u003c\/p\u003e\u003cp\u003e“With the growing allocation to private equity by Japanese institutional investors, \u003ci\u003eThe Art of Commitment Pacing \u003c\/i\u003eprovides a very useful weapon for them to build a sophisticated investment program. We live in a volatile investment environment and managing a private equity portfolio that lacks liquidity is not an easy task. This book helps investors to overcome their challenges.” \u003cbr\u003e \u003cb\u003e—Kazushige Kobayashi, Managing Director, MCP Asset Management \u003c\/b\u003e \u003c\/p\u003e\u003cp\u003e“Thomas Meyer delves into the critical risk associated with Private Capital: its inherent illiquidity. Expanding on the concepts introduced in his previous best-selling works, Thomas offers an in-depth exploration of this risk. He provides essential strategies, including commitment pacing, to safeguard institutional investors against potential significant upheavals. This book is an indispensable guide for every investor in private capital looking to optimize their success.” \u003cbr\u003e \u003cb\u003e—Pierre-Yves Mathonet,\u003c\/b\u003e Former Head of Risk, Private Equities Department, Abu Dhabi Investment Authority and former Head of Division, Risk Management, Private Equity, European Investment Fund\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47990160851173,"sku":"NP9781394159604","price":70.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9781394159604.jpg?v=1761786737","url":"https:\/\/k12savings.com\/es\/products\/the-art-of-commitment-pacing-isbn-9781394159604","provider":"K12savings","version":"1.0","type":"link"}