Macroeconomic Effects on the Modeling of Private Capital Cash Flows

The demand of private capital investing has investors clamoring for more information about prospective cash flows. Historically, that data has been hard to estimate. Because the investments aren’t traded on a public venue, there are few figures generated beyond the data received by existing investors.

So what’s an investor to do? FRG has developed a Private Capital Model solution that provides more insight and understanding of the probable cashflows, one that includes the macroeconomic variables that have been found to influence cash flows and significantly improve the forecasting probabilities. We have found those variables create a more complete picture than the Takahashi and Alexander model, commonly used within the industry to provide guidance around cash flows.

Three of FRG’s modeling and investment experts – Dr. Jimmie Lenz, Dominic Pazzula and Jonathan Leonardelli – have written a new white paper detailing the methodology used to create the Private Capital Model, and the results the model provides. Download the paper, “Macroeconomic Effects on the Modeling of Private Capital Cash Flows” from the Resources section of the FRG website. Interested in a perspective on an investor’s need and utilization of cash flow information? Download FRG’s first Private Capital Fund Cash Flows paper.

Risk Premia Portfolio Case Study

See how FRG’s VOR (Visualization of Risk) platform works for a major U.S. foundation: download a case study that explores how we customized VOR application tools to help them with their day-to-day portfolio management activities, as well as their monthly analysis and performance reporting.

The study shows how FRG was able to leverage its econometric expertise, system development capability and logistical strength to empower the foundation’s specialized investment team. Read the study, and learn more about VOR, here.

Happy 10th Anniversary, FRG!

A 10th anniversary calls for a special celebration with family and friends. At our annual party on Dec. 16, our consultants — from as nearby as Cary and as far away as Kuala Lumpur, Malaysia — enjoyed a night of casino-style gaming, music and fun at Market Hall in Raleigh. Here’s to the next 10 years!

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The Fed Plans to Test Banks’ Response to Negative Interest Rates

The Federal Reserve has announced its plans to test the ability of the country’s largest banks to weather a prolonged period of negative interest rates.

As reported in Bloomberg Business, the Fed wants reassurance from this year’s stress test that these banks can withstand the economic scenarios typical of a severe global recession, which could be accompanied by three-month bill rates falling below zero for three years.

Read more about this year’s stress tests in Bloomberg Business.

The experts at Financial Risk Group are uniquely positioned to help banks test their vulnerabilities. Contact us today for more information.

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