RT Journal Article
SR Electronic
T1 Quantification of Reinvestment Risk in the Private Investment Portfolio
JF The Journal of Private Equity
FD Institutional Investor Journals
SP 70
OP 78
DO 10.3905/jpe.2001.319984
VO 4
IS 2
A1 Austin M. Long III
YR 2001
UL https://pm-research.com/content/4/2/70.abstract
AB Inherent in an early distribution from a private market investment is the risk that funds reinvested in either a liquid vehicle (with immediate reinvestment) or in a private market vehicle (after a delay for locating and committing to another private investment) will not achieve the returns expected for the original private market investment. Using equations derived in this article, one can calculate the reinvestment risk intrinsic to receiving a private investment distribution earlier than anticipated in the original time horizon. Analysis of the reinvestment risk may suggest private market investment policies most consistent with an investor's risk tolerance and financial goals.