‘A lot of unnecessary risk’: Lagging performance has managers’ losses under scrutiny

The post-covid era and its historically challenged fund vintages have invited greater scrutiny of managers’ track records and particularly their willingness to accept risk. As investors consider allocating more capital into an anticipated market upswing, one metric is increasingly catching their attention.

Loss ratios – in short, the percentage of a fund or manager’s deals that result in losses – have long been tracked as a simple way of assessing how much risk a firm typically takes on. But they are now rising in prominence as fund exits reveal just how widespread the losses have been over the last five years.

This episode takes listeners inside this month’s PERE cover story on loss ratios and how investors and their consultants are using them to take a more nuanced view of fund and manager performance.

Listen as host Greg Dool speaks with PERE editor Evelyn Lee to break down the numbers and how allocators are interpreting them. Joining the episode is Jeff Giller, head of StepStone Real Estate, who shares his perspective on loss ratios and how they relate to other key metrics.