Research Papers

The profitability and investment potential into AI is not a contentious topic. But to what extent could AI disrupt and enhance the actual process of investing in alternatives itself?

We believe the scope for added value is significant, and growing quickly, both in terms of delegated investments and direct investment into high potential companies. This paper outlines some of the areas of investing into alternative investments (AI) where we think the application of artificial intelligence (AI) already makes sense and where it will become increasingly relevant in the future.

FrontLine Research

Sep 20, 2019

Private vs. public:
co-movements are stronger than you think

The quarterly movements of multiples of US LBO funds and major US stock indexes appear to be significantly positively correlated, and this observation is further amplified during the bullish market periods immediately before the markets contracted. US LBO funds exhibit consistently lower volatility of performance relative to the public market indexes. Fund managers need to see two successive quarters of strong and consistent shifts in public markets to reflect it significantly in their TVPIs. The main philosophy is to adjust portfolio values moderately but in line with the indexes, sometimes catching up with sustained strong movements.

FrontLine Research

Aug 01, 2019

Setting up a monitoring system in private equity

This edition of Frontline uses eFront Insight data to see whether the deployment of some simple automated triggers, based on carefully constructed fail-safe thresholds, could help investors better understand their risks and exposures ahead of time, allowing them to be more proactive in responding to threats and exploiting opportunity.

Quarterly Reports

Jul 18, 2019

Returns, risks and liquidity of VC Funds in Q1 2019

Active venture capital funds made a very impressive closure of 2018, far exceeding historical averages. These high last-quarter returns remain associated with comparatively low risk and shorter time-to-liquidity, as VC funds capitalize on a favorable exit environment.

FrontLine Research

Jul 11, 2019

Are preferred rates of return a real hurdle?

Most hurdle rates featured in private equity funds are set at 8% of internal rate of return. Although the origin of this specific figure is unclear, it is still largely applied to this day. It is of crucial importance for the fund manager: if this rate of return is not reached, then fund investors collect the full profits of the fund.

White Papers

Jul 01, 2019

Top eFront Research Findings

Our research indicates that private equity funds struggle to deploy capital at the same pace as they raise it, as distributions have outweighed capital calls by a significant and striking degree over the past five years.

FrontLine Research

May 22, 2019

Does size matter? In US LBO, yes.

This issue of FrontLine makes a comparison of return profiles and cash flow schedules of different types of LBO funds (small, medium, large and mega cap funds). The results of the analysis are in line with the well-established analogous findings from the public markets. Small caps perform better on average, but the large caps are better predictable and bear less risk for the investor.

FrontLine Research

Apr 25, 2019

Assessing the liquidity risk in private equity

To contribute to the ongoing debate about private markets “illiquidity premium”, this paper proposes a new approach to liquidity as a dimension of private equity investing, along with risk and return. Along those lines, the liquidity risk associated with private equity lies in the variation of holding periods over time. To assess this risk, an equivalent to holding periods can be approached by calculating an average time-to-liquidity, which is a function of multiples and IRRs.

Thanks to the high quality of the data provided by eFront Insight, it is possible to evaluate the average time-exposure of investors and estimate the variations around this average.

AI²: Alternative Investments Meet Artificial Intelligence

Private vs. public: co-movements are stronger than you think

Setting up a monitoring system in private equity

Returns, risks and liquidity of VC Funds in Q1 2019

Are preferred rates of return a real hurdle?

Top eFront Research Findings

Does size matter? In US LBO, yes.

Assessing the liquidity risk in private equity

AI^²: Alternative Investments Meet Artificial Intelligence

Private vs. public:
co-movements are stronger than you think