Nesbitt: Cliffwater seeded its PE interval fund by acquiring an insurance fund
Steve Nesbitt · Stephen Nesbitt – Innovation in Private Markets for RIAs (EP.410) · Oct 7, 2024 · at 37:35
Stephen Nesbitt, CEO of Cliffwater, explains how Cliffwater deployed capital quickly to scale its private equity interval fund past $1 billion.
0:00 / 0:15exact quote · 15.7s
720p mp4 · rendered on demand · StarZero watermark
“I will say, on the private equity, we didn't launch from zero, just cash. We negotiated with a large insurance company that had a private fund, and we bought that private fund, flipped it to an interval fund, and on we went.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Steve Nesbitt
Nesbitt: Only about a dozen hedge funds really matter today
“And I don't know, there are, at least in my opinion, maybe a dozen hedge funds that really matter today.”
Nesbitt: Unfunded primary commitments will cause PE interval funds to fail
“If you use the typical institutional playbook, you can't, okay? If you're doing primaries, you got these big unfunded commitments, that implementation approach will not work. You're going to get yourself in trouble. But first of all, you've changed strategy on…”
Nesbitt: Private debt will maintain a 3% to 5% illiquidity premium
“I can go back to the eighties and tell you that everybody thought the private equity premium would go away. And it's really been pretty consistent at three to five percent. I expect the same on the private debt side.”
Nesbitt: Asset allocation determines returns more than manager selection
“Success there was on the premise that we spend 90% of our time on manager selection, but really it's asset allocation that's going to determine returns.”
Nesbitt: Over-diversifying into too many asset classes provides no performance benefit
“One of my gripes is sometimes people over-diversify. They're not sure, so they end up with Godly number of asset classes, which really doesn't do anything from a performance point of view.”
Nesbitt: Private debt returns depend on beta because alpha is limited
“Most asset classes, there's upside optionality, fixed income, and private debt as well. It's downside optionality, and so there's diversification, and there are a lot of good managers, and so we focus a lot more on beta than we do on alpha, which is limited in…”