Budgeting for Capital Calls Using a VaR-Inspired Approach
Research Paper
March 1, 2018
Preview
Limited partners in private-capital funds must gauge how much capital to keep in reserve to meet capital calls. Insufficient reserves may mean they are unable to meet the calls, while excessive reserves could weaken expected returns.
In this paper, we discuss this investor challenge and introduce a new concept called maximum probable contribution (MPC), which overcomes two key limitations of traditional models.
This paper was originally published on Burgiss.com. MSCI acquired The Burgiss Group, LLC in October 2023.
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