Private markets commitment pacing model
How much should you commit to private funds each year to reach and hold your target allocation? Enter your portfolio and fund assumptions to get an annual commitment plan, with projected calls, distributions and NAV.
- Commit each year
- Private NAV at the end of the plan
- Peak exposure, NAV plus unfunded
- Net cash flow next year
Private markets as a share of the portfolio
Year-by-year plan
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Why pacing matters
A private fund commitment isn't invested on day one. Capital is called over several years, and distributions start before the last calls arrive. Commit too little and you never reach your target. Commit too much in one year and you concentrate in a single vintage and strain liquidity when calls bunch up.
How the model works
Each year's commitment is modeled as its own vintage using the Takahashi–Alexander approach. A share of what's still unfunded is called each year. NAV grows at the fund growth rate, and a rising share of NAV is distributed as the fund ages, shaped by the bow factor. In solve mode, the model finds the steady commitment, as a % of the total portfolio each year, that lands private NAV on your target by the end of the plan.
Choosing assumptions
- Venture funds usually call capital more slowly and distribute later than buyout funds. Try a lower year 1 call rate and a higher bow factor.
- Fund growth is the NAV growth before distributions, not the net IRR you expect.
- Run a cautious case with slower distributions and lower growth before you commit to a plan.
What this model assumes
- Annual steps, one blended set of fund assumptions, and commitments made at the start of each year.
- Your current funds behave like a single pool of the average age you enter.
- Spending is paid from public assets, which also fund calls and receive distributions.
- Funds distribute everything by the end of their life.
This is a planning tool, not investment advice. Real cash flows vary widely by fund, strategy and vintage.
Frequently asked questions
What is a commitment pacing model?
A forecast of how much to commit to private funds each year to reach and hold a target allocation. It accounts for the fact that funds call capital over several years and start returning it before the last calls are made.
Why can't I commit my whole target allocation in one year?
Commitments are called over several years and distributions begin before the last calls, so a single fund rarely has its full commitment invested at once. Allocators usually commit in steady annual vintages, which also spreads exposure across market cycles.
What is the Takahashi–Alexander model?
A cash-flow model from the Yale Investments Office, published in 2002, that projects the contributions, distributions and NAV of private funds from a few inputs: contribution rates, fund life, a growth rate, and a bow factor that sets how back-ended distributions are.
Why do allocators commit more than their target allocation?
Because at any time part of each commitment is still uncalled and part has already been returned. To keep invested NAV at the target, total exposure (NAV plus unfunded commitments) usually has to be well above it.
How often should a pacing plan be updated?
At least once a year, and after large market moves. Public market returns, the pace of distributions and the size of the total portfolio all shift the plan.
From VC10X, hosted by Prashant Choubey. Updated .
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Stress-test the plan with the liquidity stress test, or measure your funds with the fund performance calculator.