Illiquidity impacts both institutional and individual investors. No possibility of rebalancing or reinvestment causes inefficient portfolio management and dilutes returns. Intrinsically, private market funds are difficult to price and trade. Blind pools, leverage, limited information, long term horizons, contractual constraints, cash flow uncertainty, non-verifiable NAV valuations hinder comparability and fungibility. By introducing an innovative performance valuation technology and decoding the forward nature of private fund returns, XTAL allows investors to exploit new pricing information and trading possibilities that make “illiquid” private funds as transparent, efficiently accessible and exchangeable as if they were bond yields. Like commodities, for every vintage, private market funds harvest future cashflow uncertainty. With commodities, the non-fungible risk of future delivery, with respect to uncertain time and quality, is traded using expected prices for future delivery. The statistical proxy of an expected price is an average, a benchmark index. A similar approach is used with corporate bonds, traded as a spread against index prices. Properly constructed indices require representative time-weighted returns. XTAL is using proprietary and patented IP, leveraging duration attributes, to measure time-weighted returns, build a robust stochastic framework and uncover private market fund expected prices. The resulting forward curve, or term structure, of private market yields unlocks the use of risk transfer solutions to rebalance or hedge private market allocations without moving the assets from investors’ portfolios, like with commodities. Splitting private market credit and equity risk incentivizes and attracts a broader group of investors (arbitrageurs, hedgers, traders, etc.), leading to a bigger pool of available liquidity. Proprietary technology, investment and capital markets expertise to shape a more efficient marketplace for private markets' investors. Engagement and knowledge sharing to grow reputation, trust and lasting relations. Follow us for private market valuation, trading and risk insights. The article details the construction and logic of a novel approach that uses Macaulay duration to create a time-weighted measure of private equity (PE) performance. The Benchmark Regulation will require any EU-regulated financial intermediary (and anyone doing business with them) to use regulated benchmarks by 2022. How the DARC methodology applies fixed income valuation techniques to private equity to solve its performance puzzle.
MISSION AND VISION
Redefining Private Market Asset Allocation Possibilities
XTAL
/ˈɛkstal/
Acronym: eXchange Traded ALternatives
Abbreviation: short for crystal, standing for transparency
OBJECTIVE
Trading the Term Structure of Private Market Returns
Enabling fungibility
RISK TRANSFER
Introducing a Broader Notion of Private Market Liquidity
Derivatives
SIGNALS
XTAL Publishes a Landmark Article on Private Market Performance
DARC ARTICLE IS PUBLISHED ON THE JOURNAL OF PORTFOLIO MANAGEMENT
XTAL Launches a Regulated Benchmarks Awareness Initiative
STARTING A GLOBAL GPs OUTREACH INITIATIVE IN PARTNERSHIP WITH EDI
XTAL Publishes White Paper
RESETTING THE CLOCK ON PRIVATE EQUITY PERFORMANCE