Private Markets Portfolio Monitoring
Italian Pension Fund | 2019-present
Engagement at a glance
|Client Country/Type:||Italian Pension Fund|
|Asset Class, Geography:||Private Markets, Global|
|Portfolio Size:||EUR 500 million|
|Service Provided:||Portfolio Monitoring||Objectives:||Design and execute quarterly monitoring for private market investments|
This investor was seeking to improve their approach to monitoring private markets strategies. Their private markets portfolio consisted of three multi-manager funds (Real Estate, Private Debt and diversified Private Markets), with underlying exposure to 64 different strategies. The client had been in all three of these funds for several years by the time they engaged bfinance, but were not satisfied with the existing approach to oversight. They sought more clarity, effective consolidation of data, and qualitative—not just quantitative—insights on the manager partners.
- Developing a consistent manager reporting framework, consolidating information from all managers across all illiquid asset classes into one set of easy-to-use reports. Private markets managers are still relatively opaque versus their public market counterparts. Even where information is being communicated, it may not be in the format that the investor prefers.
- Prioritising clear communication. Reporting is designed to suit the specific recipients: the team ensured that all materials are translated into Italian and reports for the Board contain the appropriate level of summary conclusions versus technical detail.
- Providing visibility at portfolio, asset class and individual strategy level. The framework was designed to provide clarity to the investor at different ‘layers’—to illustrate whether weak or strong performance has been generated at the level of particular strategies/managers or broader asset classes.
- Communicating with the underlying managers. With an established framework now in place, bfinance routinely communicates to gather the appropriate information and hold quarterly catch-up calls with the managers. Obtaining answers is not always straightforward; managers can be unresponsive to clients, and tend to become less helpful when their fund is nearing the end of its lifespan. The key (quantitative and qualitative) insights are then conveyed to the client.
Our specialist says
Effective private markets performance monitoring can be quite resource intensive. Even though asset managers in private markets have improved a lot in terms of transparency on performance and costs, they don’t necessarily provide the information in the way that would best suit the client—so it can be difficult to digest, consolidate and form a clear picture. It’s also quite important to form qualitative views about what’s going on with the managers—especially where the strategies are quite esoteric and hard to compare against peers.