Cliffwater’s Role

Cliffwater tailors its advisory services to the individual needs of its clients based on each client’s specific circumstances and objectives. For example, some clients may select Cliffwater’s non-discretionary advisory services, whereas other clients may choose discretionary advisory services. In addition, some clients may retain Cliffwater to provide advisory services for all of their alternative investments, whereas other clients may retain Cliffwater for one alternative asset category. Finally, some clients may want a full range of advisory services including strategy, education and research, portfolio construction and ongoing portfolio management, investment recommendations, and monitoring and reporting, whereas other clients may want a subset of these services.

Cliffwater can manage discretionary portfolios across all asset classes or for one or more alternatives categories. For discretionary clients, we exercise daily portfolio management responsibility over the investments and provide portfolio administration.

In non-discretionary advisory assignments, Cliffwater seeks to work with clients to implement their alternative investment portfolios to meet their objectives, including portfolio design and construction, fund selection and ongoing management of the portfolio, while also giving clients information necessary to make informed investment decisions.

Asset Allocation

Cliffwater has extensive experience in providing asset allocation advice to institutional investors. On a quarterly basis, we publish long-term return and risk forecasts for the major asset classes, including alternative and traditional asset classes, along with tactical forecasts for most of the liquid asset classes covered. These reports are intended to provide clients with a valuable resource for asset allocation studies that set long-term portfolio asset class targets.

Cliffwater uses a set of proprietary asset allocation models that combine traditional and alternative asset classes to strive to produce optimal portfolio choices that take into account the dynamic operating characteristics of each client’s environment.

These models integrate, through Monte Carlo simulation, uncertain asset returns with uncertain liabilities or operating results. Unlike models that work only with traditional investments, Cliffwater incorporates analyses that factor in the lack of liquidity and stickiness in rebalancing that are features of alternative investments.

Private Debt

The Cliffwater private debt team conducts industry research and manager due diligence across a range of private debt opportunities, from senior secured lending to mezzanine debt to distressed lending. Our research includes two Cliffwater sponsored websites dedicated to private debt, and, each maintaining Cliffwater created indices of private debt. In addition, Cliffwater maintains comprehensive databases of private debt managers globally.

Cliffwater’s philosophy is to build a multi-manager portfolio that emphasizes current yield, minimizes credit losses, and takes advantage of unique opportunities.

We are also active in a top-down understanding of the credit markets and maintain credit valuation models that assist in positioning a diversified credit portfolio for differing stages of the credit cycle.

Hedge Funds

Cliffwater has a team of investment professionals in its New York and Los Angeles offices focused exclusively on hedge funds. Their responsibilities include seeking to identify what Cliffwater believes to be top-tier hedge funds, performing investment and operations due diligence, gaining access for Cliffwater clients, and providing ongoing risk management of clients’ hedge fund portfolios through a disciplined monthly monitoring process.

Cliffwater’s clients largely invest directly in hedge funds, diversified by style, including market neutral, credit, distressed, event driven, equity long/short, macro and multi-strategy funds.

Our clients’ portfolio objective is to achieve equity-like returns at a bond-like level of risk. Cliffwater also assists clients in building custom hedge fund portfolios including portable alpha portfolios using hedge funds, tail risk portfolios, and single strategy hedge fund portfolios.

Private Equity

Cliffwater has a team of investment professionals in its Los Angeles and New York offices focused exclusively on private equity partnerships. Their responsibilities include formulating an investment plan for diversifying the private equity commitments across vintage years, seeking to identify what Cliffwater believes to be top-tier private equity partnerships, performing investment and operations due diligence, gaining access for Cliffwater clients, negotiating partnership agreements, and providing ongoing monitoring of the portfolio, including participation on limited partner advisory boards.

Cliffwater’s philosophy is to identify a select group or private equity partnerships managed by firms that Cliffwater believes can produce first quartile investment returns.

Cliffwater believes such firms have superior organization and resources, value added investment strategies, a history of generating top-tier performance, and exhibit a continuity of professional staff and investment focus. Gaining access to these partnerships for Cliffwater’s clients is a vital part of our efforts, and senior Cliffwater professionals work hard to develop relationships with general partners, sometimes years in advance of their expected fundraising.

Real Assets

Investment professionals in Cliffwater’s Los Angeles office seek to identify what Cliffwater believes to be top-tier investment opportunities in real assets, performing investment and operations due diligence, gain access for Cliffwater clients, and provide ongoing monitoring of the portfolio. Investments include real estate, energy, timber, and other commodity oriented investments.

Cliffwater combines private and public investments to achieve a diversified global real assets portfolio that is intended to have a low correlation with public equities, a significant real return, and a high correlation to inflation.

REIT investments are used to achieve a diversified portfolio of core real estate holdings, coupled with investments in private opportunistic real estate partnerships diversified by sector, geography and across vintage years. Cliffwater also evaluates infrastructure opportunities. In energy, private investments emphasize partnerships that range from upstream opportunities in exploration and production to downstream distribution and servicing, to renewable and alternative energy partnerships. Timber partnerships play a role in Cliffwater allocations to real assets but, as with all alternative investment opportunities, due diligence pays close attention to current market valuation. Public investments include commodity futures strategies, global stock portfolios focused on natural resource companies, and commodity oriented hedge funds.