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  "documentTitle": "Private Markets Asset Allocation Guide May 2023  002",
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  "notes": "The slide uses two charts to demonstrate the effect of return smoothing: a time-series bar chart showing the impact of the 2008 crisis on private equity vs public markets, and a bar chart comparing historical vs unsmoothed risk across asset classes.",
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      "text": "Return streams for illiquid assets tend to come with “sticky” prices which mask volatility.",
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      "text": "Global Financial Crisis: Statement Median IRR (%) and Unsmoothed IRR",
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      "text": "Applying unsmoothing methodology to historical risk",
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      "text": "Return streams for illiquid assets tend to come with \"sticky\" prices which mask volatility\nGeneral Partners use Financial Account Standards Board techniques in appraisal based valuation models, like public market comparable, private transaction comparable & discounted cash flow models to estimate Net Asset Values to account for the lack of mark-to-mark price discovery that exists in publicly traded securities\nValuation techniques build on previous valuations and changes to fundamentals which can cause persistence in valuations that \"smooth\" the estimated return experience over time\nTo combat hidden risks from illiquidity we analyze and \"unsmooth\" returns using the Fisher-Geltner-Webb (1994) methodology to gain a more accurate gage on the underlying volatility.",
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      "text": "Volatility: 23.8%",
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      "text": "Source: Cambridge Associates, UBS. Fisher, J., D. Geltner, and B. Webb. \"Value indices of commercial real estate: A comparison of index construction methods,\" The Journal of Real Estate Finance and Economics 9.2\" (1994)",
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