DANCEST 805 Lecture Notes - Lecture 14: Carried Interest, Performance Metric, In Private

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2 Nov 2020
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Iapm s8: private equity part 4 pe portfolio construction & Iapm s8 week5: private equity portfolio construction: considerations. Cash-flow management: investors only need to fund % of total capital commitment at outset initial funding is then followed by subsequent drawdowns. Just-in-time drawdowns: used to minimise amount of time that a fund holds uninvested cash, which is a drag on fund performance when measured as internal rate of return (irr) Investors need to maintain sufficient liquidity to meet drawdown obligations whenever called. J-curve pattern: result of combination of draw-downs and distributions as net cumulative cash flows to investors: manager selection, manager performance varies widely across pe managers outperformance of top ones can be by. 30% in pe whereas in public listed equity markets it is typically only 1-5% 3. 1 diversification across multiple sub-asset classes: returns from different sub-classes can be very different (eg: lbos performed well in late 1980s while.

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