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Investments

Alternative Investments Series, Part 3: How to Educate Clients on Alts

May 8, 2025

Glossary of Private Equity Terms


Structure of a Private Equity Fund

Private equity funds are generally structured as Limited Partnerships.


Private Equity Fund Timeline

The life of typical private equity fund extends over 10 years and has several distinct phases.


Unique Characteristics of Private Equity: J-Curve

The “J-curve” is a pattern of cash flows Wherein the Initial years the cumulative cash flows to the Investor are negative and become positive as more investments are realized.

For illustrative purposes only.
Note: The J-curve illustrated above is for illustrative purposes only and does not represent the J-curve of any specific private equity fund. Actual performance may vary.
There can be no assurance that Private Equity investments will have a positive return. The amount of distribution that a Fund may pay, if any, is uncertain and there is no guarantee that any distributions will be paid out in the time frame described above. Although a private equity investment may generate some current income, return of capital and the realization of gains, if any, from such investments generally will occur only upon partial or complete sale or other disposition of such portfolio companies. An investor could incur a total or substantial loss of his or her investment. Alternative investments include risks such as illiquidity, long time horizons, reduced transparency, and potential loss of principal and are only available to qualified investors.


Illustrative Private Capital Plan and Portfolio Construction Program

A private capital program typically takes several years to fully implement. We believe in implementation through consistent annual commitment programs that allow for diversification of vintage year, strategy, and manager style.

The model shown above is hypothetical and does not reflect an actual investment nor a specific recommendation to any one client or prospect. Model results reflect Robertson Stephens forecasts. Actual investment results will vary. Model Assumptions: All hedge fund allocations are funded immediately. Private equity, private credit and real estate allocations are funded 25%, 30%, 30% and 15% for the four years following the investment. Private equity funds distribute 10% net of fees in Year 5.


Understanding Private Equity Performance Measures

Private equity fund returns are not calculated in the same manner as traditional assets because the commitment may not be fully invested.

IRR values time value of money while return multiple values total return regardless of time. For illustrative purposes only. Does not represent the performance, or cash flow, of an actual company or fund.


There is no guarantee that benefits will be achieved. Alternative investments are speculative and involve substantial risks including significant loss of principal, high illiquidity, long time horizons, uneven growth rates, high fees, onerous tax consequences, limited transparency and regulation, and are only available to qualified investors.

Investment advisory services offered through Robertson Stephens Wealth Management, LLC (“Robertson Stephens”), an SEC-registered investment advisor. Registration does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. This material is for general informational purposes only and should not be construed as investment, tax or legal advice. It does not constitute a recommendation or offer to buy or sell any security, has not been tailored to the needs of any specific investor, and should not provide the basis for any investment decision. Please consult with your Advisor prior to making any investment decisions. The information contained herein was compiled from sources believed to be reliable, but Robertson Stephens does not guarantee its accuracy or completeness. Information, views and opinions are current as of the date of this presentation, are based on the information available at the time, and are subject to change based on market and other conditions. Robertson Stephens assumes no duty to update this information. Unless otherwise noted, any individual opinions presented are those of the author and not necessarily those of Robertson Stephens. Performance may be compared to several indices. Indices are unmanaged and reflect the reinvestment of all income or dividends but do not reflect the deduction of any fees or expenses which would reduce returns. A complete list of Robertson Stephens Investment Office recommendations over the previous 12 months is available upon request. Past performance does not guarantee future results. Forward-looking performance objectives, targets or estimates are not guaranteed and may not be achieved. Investing entails risks, including possible loss of principal. Alternative investments are speculative and involve substantial risks including significant loss of principal, high illiquidity, long time horizons, uneven growth rates, high fees, onerous tax consequences, limited transparency and limited regulation. Alternative investments are not suitable for all investors and are only available to qualified investors. Please refer to the private placement memorandum for a complete listing and description of terms and risks. This material is an investment advisory publication intended for investment advisory clients and prospective clients only. Robertson Stephens only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Robertson Stephens’ current written disclosure brochure filed with the SEC which discusses, among other things, Robertson Stephens’ business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. © 2025 Robertson Stephens Wealth Management, LLC. All rights reserved. Robertson Stephens is a registered trademark of Robertson Stephens Wealth Management, LLC in the United States and elsewhere.

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