Evaluating a private markets portfolio
Private markets benchmarking can be complicated.
With a wide range of decision points, from methodology to performance metrics, investors navigating the private markets landscape today can adopt very different approaches to benchmarking performance.
This diversity of approach can make standardized comparisons challenging and raises an important question: how can investors be confident they are measuring the outcomes of their portfolio activity effectively?
With so many options available, it is essential for investors to ensure their benchmarking methodologies are robust and fit for purpose, enabling them to evaluate performance in an informed way and support future investment decisions.
In our latest paper, Evaluating a Private Markets Portfolio, we explore common benchmarking methodologies and performance metrics, and outlines a practical roadmap investors can use to select the benchmarks best suited to their investment process.
The paper covers:
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The use of public market indices, such as the Russell 3000, S&P 500 and MSCI ACWI, as reference points for benchmarking private market investment performance.
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The three most commonly used performance metrics, IRR, TVPI and DPI, including the rationale and benefits of each.
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Common comparison models, including time-weighted and dollar-weighted return approaches, and when each may be most appropriate.
Each approach has its own strengths and limitations, making it important for investors to periodically reassess whether their benchmarking framework remains fit for purpose. Ultimately, the right benchmarking approach should be tailored to each investor’s objectives.
To learn more about these benchmarking methodologies, and to begin assessing which approach may be most appropriate for your portfolio, download the full report below.
