PT  - JOURNAL ARTICLE
AU  - Peng Wang
AU  - Steven Peterson
TI  - Long-Run Management of Private Equity Investment
AID  - 10.3905/jpe.2019.1.083
DP  - 2019 May 31
TA  - The Journal of Private Equity
PG  - 30--42
VI  - 22
IP  - 3
4099  - https://pm-research.com/content/22/3/30.short
4100  - https://pm-research.com/content/22/3/30.full
AB  - The authors present a stochastic simulation model that projects cash flows (capital calls and distributions) as well as unfunded commitment levels for private equity allocations over time. Their contribution links the underlying dynamics in the targeted private equity allocation to movements in the underlying portfolio while managing liquidity and rebalancing risks. Importantly, their model allows investors to assess the impact of changing the pace of annual commitment and of varying assumptions regarding capital calls, distributions, and underlying returns. Their model also offers insights into more-efficient approaches to building up an allocation to private equity strategies over time. TOPICS: Private equity, simulations, portfolio construction, risk management