Help: How to use the Portfolio Forecasting tool

For any Limited Partner (LP), building and managing a private fund portfolio presents several challenges, two of which are cash management and allocation targeting. PitchBook’s Institutional Research Group (PIRG) has created cash flow forecasting and commitment pacing models that leverage PitchBook’s extensive fund returns datasets to tackle these challenges. This article will walk you through constructing a portfolio and setting pacing assumptions to generate forecasts and help inform your allocation decisions.

If you’re interested in learning about the calculation logic behind this tool, skip ahead to the Methodology section of this article.

Note: PitchBook takes data privacy seriously. Any information provided remains entirely private to the end user submitting the data. Data provided is not used to supplement the information PitchBook already holds for investors and funds available to other PitchBook users.

You can find the Portfolio Forecasting tool under the Funds Analysis section within the main sidebar.

Once in the tool, you can choose from the following options to begin. These correspond with the numbers in the image below.

1. To view examples of pre-built forecasts, check out the Explore Example Portfolios tile.
2. To upload an existing list of funds, select the Upload a XLS or CSV List tile.
3. To add funds individually to your portfolio, select the Add Funds Manually tile.
4. If you prefer to set your pacing criteria immediately, select the Set Pacing tile instead.
5. Select the + Create Portfolio option to add funds manually.

In the next section, we will outline how to use each of these features.

Selecting the Explore Example Portfolios tile on the Portfolio Forecasting home page lets you preview pre-curated portfolios before building your own.

You can choose between the following example portfolio strategies: Ramp-up Single Strategy, Ramp-up Multi Strategy, Mature Single Strategy, or a Mature Multi Strategy. Hover over each tile for detailed information about the makeup of the fund portfolio.

• Mature vs. Ramp-up Strategy – Mature or ramp-up describes how old the funds in the portfolio are. These definitions can be subjective to the Limited Partner. For our example portfolios, our mature strategy portfolios have inception dates of 2012, while our example ramp-up portfolios have inception dates of 2018 and 2020.
• Single vs. Multi Strategy– A single or multi strategy refers to the portfolio’s number of asset classes (also referred to as fund types). A single strategy portfolio contains one asset class, while a multi strategy portfolio contains more than one asset class.

Once you choose a strategy, you’ll land on the Add Funds to Your Portfolio screen. Here, you can view the underlying data for each fund in the portfolio. Click Continue with Funds to view the pacing criteria, and click Run to see the forecast results.

There are a couple of ways you can add funds to your portfolio. You can either add your funds one by one or upload a list of funds to the tool. Check out the following sections for guidance on both of these processes.

After selecting the Add Funds Manually tile or the Create a Portfolio button on the Portfolio Forecasting homepage, you’ll land on the Add Funds to your Portfolio screen.

1. Type the name of the fund you’d like to add to your portfolio into the Fund Name box.
   
   1. You’ll notice some fields are pre-generated with suggested data. Edit these as you’d like.
2. A dropdown will appear with matches to existing funds in the PitchBook database.
   
   1. If you select an existing fund in PitchBook, the Fund Name, Fund Type, Vintage Year, and Inception Date fields will populate, if available.
   2. You can choose to override this data with your own if you’d prefer. Visit the Matching and unmatching your fund data section of this article for guidance.
3. Next, input your data for any blank fields to proceed. Once you’ve filled out all these fields, you can auto-generate Expected TVPI or input your own.
4. Select the Add new fund button below your funds list to add more funds. Your funds will be autosaved to the portfolio as you add and edit them.

If you have already created a list of funds you’d like to use, you can upload them all at once instead of manually. From the Portfolio Forecasting homepage, select the Upload a XLS or CSV List tile to get started on a new portfolio.

If you are editing an existing portfolio, click the Upload funds button on the Add Funds to your Portfolio page. Here, you can choose the Replace list option, which will remove your current funds, or the Add new funds to list option, which will add additional funds to the portfolio. After selecting the appropriate upload option, the next step is to prepare your file for import:

1. Prepare your file

On the Upload a List pop-up window, you can upload a CSV, XLS, or XLSX file created with the template attached below or your own spreadsheet. If you use your own spreadsheet, ensure that the data in the columns matches these data types:

• Fund Name (Required)
• Fund Type
• Vintage Year (YYYY)
• Inception Date (MM/DD/YYYY)
• Fund Length (years)
• Investment Period
• Commitment Size
• Contributed Amount
• Expected Call %
• Recallable Capital Amount
• Distributed Amount
• NAV Amount
• Expected TVPI

Template:

2. Uploading your list and mapping your data headers

Next, you’ll need to upload your list and ensure that the headers from your spreadsheet are mapped to the correct PitchBook Headers.

1. Drag and drop a file or click browse to upload your list.
2. Click Next to navigate to the Map Headers screen.
3. In the Your Headers column, confirm the column header from each dropdown menu corresponds to the matching type of information.
4. Note the headers from your uploaded file will appear in the Your Headers column.
5. Click Next, and your upload will be complete.

3. Review your uploaded funds

Once your funds are uploaded, you’ll see them listed in the tool. Any funds with value errors will be outlined in orange and appear at the top of the list. If you attempt to move to the next screen while there are errors, those funds will not be included in your forecast.

Hover over the orange triangles in your fund list to receive troubleshooting suggestions for each error. Some reasons for errors may include fund names with incorrect numerical entries or dates entered in invalid formats.

If you’d like to review your fund data based on specific criteria, click the funnel icon next to any of the column headings to filter based on that heading. Be sure to click Apply Filters to action your changes and curate the view you want. You can also click the grey arrow to the left of the funnel icon on any column heading to sort your values in ascending or descending order for viewing ease. Note any filters you apply will not alter your portfolio.

You can choose to match your funds to PitchBook’s data for the Fund Name, Fund Type, Vintage Year, and Inception Date fields. Visit the Matching and unmatching your fund data in the next section of this article for details.

There are several ways to manage your funds’ data after adding them to your portfolio. The following section will go over matching and unmatching funds as well as sorting and filtering them.

Matching your funds

1. Click on any fund in your list.
2. A drop-down menu will appear with matches to existing funds in the PitchBook database.
   
   1. If you select an existing fund in PitchBook, the Fund Name, Fund Type, Vintage Year, and Inception Date fields will populate, if available.
3. If you already have data in these fields, an Override pop-up window will appear to confirm you’d like to update your data to PitchBook’s. Select Proceed to update.
4. Once matched, a checkmark will appear before the fund’s name, confirming it is matched.

Unmatching your funds

1. Click into the field you’d like to edit and select the X button.
2. Type in the value you’d like to replace.
3. An Override pop-up window will appear to confirm your data will no longer be matched with PitchBook’s. Select Proceed to update.
4. The data will be updated, and the checkmark on the field will disappear.

Note: If you match your fund to PitchBook data, your portfolio will update as PitchBook updates with new fund data.

To create a pacing plan, select the Set Pacing tile on the Portfolio Forecasting home page. If you’d like to set pacing after adding all the funds you would like to include in your portfolio, click the Continue with Funds button on the Add Funds to your Portfolio screen.

On the Set Pacing Criteria for Your Portfolio page, if you have added funds, they will be grouped by Fund Type, and the Current NAV ($) will be generated. Now you can begin adding your portfolio details:

1. Enter your Current Portfolio Value ($) and Portfolio Growth Rate (%).
2. Next, set Years to Achieve Target and Target Allocation (%) and the tool will generate the Target NAV ($) for all the funds you have added.

Adding Additional Fund Types

On this page, you can also click Add new fund type to add other fund type categories to your existing portfolio. These supplementary fund strategies consist of aggregated returns data, allowing you to generate scenario forecasts that provide insight into potential investment strategies. All fields must be filled out in order to generate a forecast.

Return to Modify Funds

There are several entry points to go back and edit your funds. Click Modify Funds on the top right of the page, or click Modify Funds or the pencil icon within your funds list.

Once you have perfected your portfolio and added the necessary pacing criteria, click Run to generate your forecast. You will be able to view analytics on the following:

• Historical Commitments – This chart displays a yearly timeline comparing the commitment size and amount already contributed for funds within your portfolio.
• Yearly Commitment Schedule – This chart and table utilize historical data from thousands of private market funds to produce a commitment timeline that incorporates the average NAV path of various fund strategies. The schedule is based on the portfolio of funds, target allocation size, and target timeframe entered into PitchBook.
• Forecasted Cash Flow Profile – These charts and tables utilize historical data from thousands of private market funds to produce a baseline cash flow profile from historical averages observing contribution and distribution rates by fund strategy.
  
  • In the first chart, you can select either the Baseline or the Simulations view. Monte Carlo-style simulations provide detail on the potential variability of cash flows for the portfolio across contributions, distributions, and net cash flows. The other charts and table are static (depending on your inputs) and cover cumulative cash flows, NAV, and an uncalled capital forecast.
• Capital Call at Risk (CCaR) – This chart and table provide estimates for “worst case” liquidity requirements for LPs in private market funds.

For definitions of fields within these forecasts or the methodology behind them, jump to the Definitions or Methodology section, respectively.

To customize your results view by fund type, use the Filter dropdown menu towards the left of your screen. Select Portfolio Overview to view charts with all your funds included, and select individual fund types to filter by a specific fund type.

If, after running your forecast, you decide you’d like to make some edits to your inputs, click Modify underneath your portfolio’s name or at the bottom of your screen and select either Modify Funds or Modify Pacing.

Click the Download button next to any chart to download charts via Excel, PNG, or PDF and share your forecast with others. Note that these won’t count towards your download limits.

Revisit and manage your portfolio anytime in the My Portfolios section at the top of the Portfolio Forecasting homepage. This section will only appear if you have already created portfolios.

1. Click the name of the portfolio to view its forecast.
2. Hover over a portfolio’s name and select the pencil icon on the left-hand side to edit your portfolio’s name.
3. Click Modify Criteria to return to the Pacing Criteria section, where you can adjust your criteria and add more fund strategies to your portfolio.
4. Hover over a portfolio’s name and select the paper icon on the right-hand side to duplicate it.
5. To remove a portfolio, hover over the portfolio’s name and select the trash can icon on the right-hand side of the row.
   
   1. Note that once deleted, your portfolio can not be restored.

The Portfolio Forecasting tool utilizes PitchBook’s own data from thousands of private market funds. By looking at historical fund NAV and cash flow, the Portfolio Forecasting tool runs a simulation to model out scenarios of cash flow profiles. The model factors in the current portfolio, along with statistical analysis of historical data, probability of cash flow, average cash flow, and standard deviation of cash flow.

For a more in-depth look into the methodology used in the Portfolio Forecasting tool, take a look at our Allocator Solutions report below. You can also access this report in the platform by clicking on the Methodology button on the top right corner in any of your portfolio forecasts.

Here, you can find the definition of each term in the tool broken down by section.

Portfolio Funds

• Fund Name – The name of the fund.
• Fund Type – The investment type of the included fund.
• Vintage Year – The year in which the included fund made its first investment by delivering capital to a project or company.
• Inception Date – The date of the first investment or final close, whichever is earlier.
• Fund Length – Fund Length is the contractually agreed timeframe for a GP to invest LPs’ commitments, generate returns and fully distribute proceeds. The value represents years from the inception date.
• Investment Period – The investment period is the contractually agreed timeframe that a manager has to call down capital to make investments. The value represents years from the inception date.
• Contributed ($) – The total capital that you paid into the included fund.
• Expected Call % – The proportion of the original commitment expected to be called down, before the consideration of recallable capital.
• Recallable Capital – This represents distributed capital that can be drawn down again by the manager. Cumulative capital calls at the end of the investment period is expected to be equal to total commitments multiplied by expected call percentage then adding recalled capital.
• Distributed ($) – The amount of capital returned to you by the included fund’s manager.
• Commitment Size ($) – The size of commitments made by you to the included fund.
• NAV ($) – The net asset value of your interest in fund holdings/portfolio companies.
• Expected TVPI – The expected ratio of the current value of remaining investments within a fund, plus the total value of all distributions to date, relative to the total amount of capital paid into the fund to date. Enter TVPI yourself, or conveniently use an auto-generated TVPI. Auto-generated TVPI is based on historical funds and current TVPI of a fund. PitchBook does not provide an explicit forecast, and any TVPI input is at the user’s discretion.

Pacing criteria

Current Portfolio Value ($) – The value of the overall portfolio, including private assets, public equities, fixed income assets, etc. This will be used for estimated dollar-amount allocation targets for private fund strategies.
Portfolio Growth Rate (%) – The expected long-term growth rate of the entire portfolio, used to estimate the dollar-amount allocation target in the future.
Fund Type – Funds you have previously added will be grouped by Fund Type. New fund types can also be added to incorporate those investment strategies into your cash flow analysis.
Current NAV ($) – The current total net asset value of funds in the strategy.
Years to Achieve Target – The time horizon to go from the Current Allocation (%) to the Target Allocation (%).
Current Allocation (%) – The percentage of the Current Portfolio Value ($) that the strategy represents.
Target Allocation (%) – The desired allocation of the private fund strategy as a percent of the overall portfolio value.
Target NAV ($) – The dollar amount that the Target Allocation (%) represents, based on the expected future value of the overall portfolio. This number is generated by PitchBook. Target NAV calculation is based on the values for current portfolio value, growth rate, years to achieve target, and % target allocation.

Forecasts

Historical Commitments chart

• Commitment Size – Total of Commitment Size amounts across all funds in a given vintage year.
• Contributed – Total of Contributed amounts paid in across all funds in a given vintage year.
• Commitment Amount – The amount, in millions, committed to all funds within the selected filter.
• Vintage Year – The year in which the fund made its first investment by delivering capital to a project or company.

Yearly Commitment Schedule chart and table

• Year of Investment – The year in which capital will be called in.
• Commitment Amount – The amount, in millions, that will need to be committed to funds within the selected categories to achieve the desired targets entered for the portfolio’s pacing criteria.
• Total – The total commitment amount in the corresponding year.
• Real Estate Opportunities – The commitment amount allocated to Real Estate Opportunities funds in the corresponding year.
• Venture - General – The commitment amount allocated to Venture - General funds in the corresponding year.
• Direct Lending – The commitment amount allocated to Direct Lending funds in the corresponding year.
• Buyout – The commitment amount allocated to Buyout funds in the corresponding year.

Forecasted Cash Flow Profile charts and table

• Years from Starting Quarter – Quarter over quarter display of chart data, beginning at the present time.
• Contribution – The expected capital paid in for all funds in the portfolio, shown quarter by quarter.
• Distribution – The expected capital distributed to the limited partner for all funds in the portfolio, shown quarter by quarter.
• Net Cash Flow – The cumulative increase or decrease of capital to date for the limited partner, resulting from this portfolio.
• Years from Starting Quarter – Quarter over quarter display of chart data, beginning at the present time.
• Cumulative Distribution – The total capital distributed to the limited partner to date of all funds in the portfolio.
• Cumulative Contribution – The total capital paid in to date of all funds in the portfolio.
• NAV – The market value or remaining value of the unrealized assets across all funds in the portfolio.
• Uncalled Capital – Capital that the limited partner has committed to the fund and has not yet paid in.
• Quarterly – Displays the cash flow forecast quarter over quarter.
• Yearly – Displays the cash flow forecast year over year.
• Period – The quarter or year reflected in this row of the forecast.

Capital Call at Risk (CCaR) chart and table

• Quarterly – Displays the forecast quarter over quarter.
• Period – The quarter or year reflected in this row of the forecast.
• Percentile CCaR (90th Percentile) – The 90th percentile Capital Call at Risk (CCaR) takes the simulated capital calls and determines the 90th percentile capital call in each quarter of all the simulations. For example, a 90th percentile CCaR will find the tenth-largest capital call simulated out of 100 simulations.
• Contribution Forecast - The forecasted capital paid in for all funds in the portfolio.
• Years from Starting Quarter – Quarter over quarter display of chart data, beginning at the present time.

My Portfolios section

• My Portfolios – A collection of funds used for cash flow analysis.
• Date Created – The date that the portfolio was created in the Portfolio Forecasting tool.
• Last Modified – The most recent date that the portfolio was edited or updated.
• # of Funds – The number of funds included in the individual portfolio.
• Fund Types – The types of funds included in the individual portfolio.

Inform your allocation strategies with our cash flow management research reports created by our PitchBook Institutional Research Group (PIRG). These reports will help you better understand how LPs can optimize the pace of their commitments and provide details about the cash flow models our analysts use. You can see all these related reports within our Research Center by clicking View All Reports at the bottom of the Portfolio Forecasting tool page.

To understand how this feature fits into a broader workflow, check out PitchBook Pioneer’s course – Asset Allocation.