Portfolio Benchmarking: Best Practices for Private Investments

Benchmarking is a critical component of a successful investment program; however, measuring private investment performance vexes even the most sophisticated investors. The unique characteristics of these investments—the reporting lag, the long lock-up of capital, and the impact of the J curve, among others—make performance measurement and benchmarking difficult. When assessing and measuring performance at the aggregate private portfolio and sub-component level, the appropriate benchmark depends on the question investors are asking.