Traditionally, timing the private equity market at a fund level has been considered too difficult, given the long time frames and illiquid nature of limited partnership commitments. However, as the industry matures, and with the availability of powerful data-sets such as those provided by Pevara, it is increasingly possible to identify trends and correlations between private equity returns and wider GDP performance – with the usual caveats, of course!
In our analysis, we outline how a proactive approach to timing the market could be achieved, both strategically and tactically. Such techniques aren’t just about buying low and selling high. Having a view on the economic cycle and how it relates to different private equity markets, can allow LPs to take a strategic view of their private equity investment programme as a whole. For instance, a rising tide could be used to increase commitments to emerging managers in certain market segments.
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