The Private Equity J-Curve, Modeled for One Household
The cash J-curve is arithmetic. In an illustrative model, one fund goes about 79 percent underwater by year 4. Pacing shrinks the hole.
The Private Allocator
How a Commitment Calendar Turns Into Cash: A Pacing Planner
Commit the same amount each year and see the capital calls, distributions and cash out of pocket, year by year. Then write your own pacing policy on one page and print it.
What's inside
- A pacing planner. Pick a yearly commitment, how many years you keep committing, and one of three fund shapes. It returns the calls, distributions, running cash position, unfunded balance and fund value for each year, with a chart.
- A one-page policy worksheet. Seven prompts for the decisions a household makes before a calendar starts: target, budget, reserve, limits and review.
- A print view. The print button keeps your inputs, the year-by-year table and what you wrote. Nothing you enter leaves your browser.
A preview
For example, $100K a year for five years in the slow shape reaches its deepest cash position, about $389K out of pocket, in year 7. Distributions first cover that year's calls in year 8, and the running total is back to even in year 12. That is one illustrative path from a published model, not a forecast. The sources sit under the planner.
The planner
The model is Takahashi and Alexander's. Each fund calls a share of what is still uncalled, and pays out a rising share of its value as it ages[1]. Pick a shape. The paper's own example grows fast. The slow shape sits close to pooled legacy US private equity DPI for the 2011 to 2013 vintages[2]. The flat shape only returns the capital it called. The model gives one path per set of inputs and no range of outcomes, so read it as a shape, not a forecast[3].
Deepest cash out
$388,722
Year 7, on $500,000 committed
Distributions first cover calls
Year 8
Cash back to even
Year 12
Most still unfunded
$168,750
Promised but not yet called, end of year
| Year | Calls | Distributions | Net | Running | Unfunded |
|---|---|---|---|---|---|
| 1 | $25,000 | $0 | -$25,000 | -$25,000 | $75,000 |
| 2 | $50,000 | $51 | -$49,949 | -$74,949 | $125,000 |
| 3 | $75,000 | $489 | -$74,511 | -$149,460 | $150,000 |
| 4 | $87,500 | $2,352 | -$85,148 | -$234,607 | $162,500 |
| 5 | $93,750 | $7,282 | -$86,468 | -$321,075 | $168,750 |
| 6 | $71,875 | $17,486 | -$54,389 | -$375,464 | $96,875 |
| 7 | $48,438 | $35,179 | -$13,258 | -$388,722 | $48,438 |
| 8 | $24,219 | $61,093 | $36,874 | -$351,848 | $24,219 |
| 9 | $12,109 | $92,121 | $80,012 | -$271,836 | $12,109 |
| 10 | $6,055 | $120,011 | $113,957 | -$157,879 | $6,055 |
| 11 | $3,027 | $133,304 | $130,276 | -$27,603 | $3,027 |
| 12 | $1,514 | $124,700 | $123,186 | $95,583 | $1,514 |
| 13 | $732 | $98,400 | $97,668 | $193,251 | $781 |
| 14 | $342 | $65,509 | $65,167 | $258,418 | $439 |
| 15 | $146 | $32,689 | $32,543 | $290,961 | $293 |
| 16 | $49 | $9,192 | $9,143 | $300,104 | $244 |
Your one-page pacing policy
Your own figure, in your own words. The planner does not suggest one.
US private equity managers called far more than they distributed across 2022 and 2023[4].
Method: Takahashi and Alexander (Yale, 2001), as ported in Private Allocator research model[1]. Twelve-year fund life[1]. Calls of 25% of the uncalled balance in year one, a third in year two and half in each year after[1]. The model distributes a rising share of fund value as the fund ages; that is a model assumption, not a claim that yearly distribution amounts always rise. Shapes: the paper's example (13% growth, bow 2.5)[1]; slow (8% growth, bow 3.5), an illustrative model choice whose DPI path sits close to[2]; and flat (no growth). Every output is illustrative, deterministic and not a forecast[3]. No recommendations, and not investment advice.
- Takahashi and Alexander, Illiquid Alternative Asset Fund Modeling, Yale University Investments Office (Jan 2001; Journal of Portfolio Management, Winter 2002; PDF opened)
- Cambridge Associates US PE (legacy), US VC and Real Estate benchmark books, June 30, 2020 vintage tables (PDFs opened)
- Beutler, Billias, Holt, Seet, Lerner, Takahashi-Alexander Revisited, Journal of Portfolio Management 49(7) (Jul 2023)
- Cambridge Associates, US PE/VC Benchmark Commentary: First Half 2024 (PDF opened)
What I'd check before starting a calendar
- Whether the reserve for calls is cash, rather than something that has to be sold in a bad year.
- How the deepest cash position compares with what the household could carry through a slow stretch of distributions.
- Whether the unfunded balance is written down somewhere the family can see it.
- Whether the calendar still works in the flat shape.
Questions
Does the planner tell me how much to commit?
No. It shows the cash pattern a calendar produces under a shape you pick. How much to commit depends on your balance sheet, your other obligations and your advisers.
Why is there only one line, with no range?
The model is deterministic: one set of inputs gives one path. Its authors and later researchers point out that this can make a plan look more certain than it is. Switching between the three shapes is a rough way to see the spread.
Does it include fees?
Only as far as they sit inside the growth rate. The shapes are net cash patterns, not a fee model.
Is anything I enter saved?
No. The planner runs in your browser. Nothing you type is stored or sent.
