Commitment Pacing
Commitment pacing is the planned rate of new fund commitments over time to maintain target allocation and liquidity stability.
Allocator relevance: Prevents overcommitment, manages the J-curve, and reduces vintage concentration in private market portfolios.
Expanded Definition
In private markets, allocation is implemented through commitments that draw down over time, creating a lag between decision and exposure. Commitment pacing uses models of future capital calls and distributions to maintain target exposure while protecting liquidity and avoiding accidental concentration.
Pacing discipline becomes especially important when markets slow, distributions decline, or valuation marks lag reality.
How It Works in Practice
Allocators set annual commitment budgets and adjust based on realized DPI, expected drawdowns, and liquidity budgets. They track unfunded commitments, projected calls, and the timing of expected distributions across funds and vintages.
Decision Authority and Governance
Pacing frameworks are governed through IPS guardrails, IC approvals, and risk limits. Governance prevents reactive overcommitment during hot markets and undercommitment during stressed periods.
Common Misconceptions
- Pacing is just “how much you commit each year.”
- Distributions will reliably fund future calls.
- Pacing can be solved once and left unchanged.
Key Takeaways
- Pacing is a portfolio control system.
- It stabilizes exposure across vintages and cycles.
- Liquidity budgets and realistic distribution assumptions are essential.