Enhance confidence around allocation decisions by understanding how much and how quickly capital is typically called and returned for a strategy or a specific fund
Assess payback period, in addition to IRR, as an early indication of whether investment met expectations –inform future decision-making
Strategic Allocation
Screening/Due Diligence – CF
Peer Comparison
Use Cases for J-Curve
Strategic Allocation
Portfolio Monitoring/
Benchmarking Analysis
Peer Comparison
Contextualize the manager’s cash flow behavior earlier in the due diligence process – have better conversations with GPs sooner
Evaluate whether the typical cadence and sizes of a fund manager’s calls and distributions are suitable in the context of your portfolio's expected cash flow schedule
Compare similar managers in context of their shared benchmark when making head-to-head allocation decisions
Understand the time-series evolution/ historical returns for each benchmark in detail
Compare IRR side by side with Cash Flow timings to better interpret performance
Track capital pacing trends against their peers and see where they stand against other managers' returns throughout their funds' lifecycles.
Marketing – GPs can use J-Curve to illustrate previous curves vs. competitor funds for marketing materials and pitches.
Direct Alpha
Metric:
Annualized Rate of Excess Return
Screening/Due Diligence – CF
Portfolio Monitoring/
Benchmarking Analysis