The art of commitment pacing : engineering allocations to private capital

"While many books have been written on private equity, they tend to focus on the exciting aspects of this market -- deals, their structures, the personalities involved, statistics on stellar successes and the occasional spectacular flop. For a long time, due diligence and selection was seen to be everything' but with the market maturing and no shortage of experienced professionals, selection skills have ceased to the driver of investment success. There are still surprisingly few works that look at the processes institutional investors follow and the portfolio and risk management methodologies needed for creating value with illiquid alternative assets. Considering how much money has been flowing into illiquid alternative assets in recent years, the term alternative' increasingly looks like a misnomer. Private assets -- notably private equity, infrastructure, and real-estate -- have become an accepted and even necessary part of an institutional investment portfolio. Historically, allocations to such assets were immaterial and often experimental, and rarely justified developing the portfolio and risk tools that investors would normally rely on when designing and implementing their investment strategies. Today, however, these allocations are no longer immaterial, yet many investors still follow approaches to managing portfolios of illiquid assets that remain relatively unsophisticated and poorly adapted to the task"--