Cliffwater research shows that diversified private equity portfolios have historically delivered net returns above publicly traded stocks at comparable levels of risk.
Diversification generally includes allocations to buyouts, venture, distressed, and non-US funds.
We believe that the keys to success include a consistent commitment pace by vintage year, a rigorous due diligence process to identify top funds, and strong relationships to ensure access.
We believe that private debt has been providing investors the cash yield absent from traditional fixed income. Cliffwater has been a leader in private debt research, creating the Cliffwater Direct Lending Index, a benchmark for direct lending, and the Cliffwater BDC Index, a benchmark for publicly traded Business Development Companies.
In recognition of this research, Private Debt Investor named Stephen Nesbitt, Cliffwater's CEO, one the 30 most influential people in private debt in 2018. In 2019, Mr. Nesbitt authored the book, Private Debt: Opportunities in Corporate Direct Lending (Wiley Finance).
Real Assets and Real Estate
Real assets are expected to provide a stable real return and a hedge against unexpected inflation.
Real estate is the oldest institutional alternative asset class but Cliffwater research shows that investors have had vastly different outcomes, demonstrating the importance of a consistent strategy and fund selection.
We believe that Infrastructure, energy, and renewables have become an important extension of private real assets and are an important part of our real asset sourcing and due diligence.
Principal protection gained investor attention after the Financial Crisis but has waned as stock returns set record advances with low volatility thanks to Federal Reserve policies.
Nonetheless, certain hedge funds have offered steady, moderate returns at low volatility and low correlation to stocks. Cliffwater sources and conducts due diligence on a broad universe of hedge funds across seven major strategies, looking for hedge funds generating sustainable alpha at low risk. Cliffwater's clients have also seeded opportunistic funds launched by hedge funds that take advantage of market dislocations at attractive fees.