Cash for Calls: A Quantitative Approach to Managing Liquidity for Capital Calls


  • Studies of private market investments tend to focus on the return premium associated with illiquid assets and their appeal relative to traditional public market assets. Far less attention is paid to the need for investors in these assets to earmark liquid funds for the capital calls endemic to private market investing – and, importantly, the resulting drag on total returns.
  • Solving for the liquid allocation to complement a pending private market investment can be challenging: The speed and magnitude of realized calls are likely to be correlated – sometimes highly correlated – with financial market movements.
  • We review historical private fund call behavior to evaluate the effectiveness of various liquidity solutions or cash management strategies. The average investor in private funds must manage uncalled capital for several years.
  • “Liquidity tiering” has the potential to provide investors with additional returns relative to cash, with less risk than equivalent assets in public markets.



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