Unfunded commitment

When an investor commits £10m to a private equity fund, the money is drawn over several years. At any time, the unfunded commitment is the committed amount minus capital already called. The investor must hold or raise cash to meet future calls.

Policies limit it because calls can arrive when markets are falling and liquid assets are scarce. Typical forms cap unfunded commitments as a share of the portfolio, or cap current value plus unfunded commitments. Example wording: “unfunded commitments no more than 30% of the portfolio”.

Acclimetry’s private markets commitment limit measures unfunded commitments, committed capital, or current value plus unfunded, for named private-market classes. Example: current value of 300 plus unfunded commitments of 200 is 50% of a 1,000 portfolio, a breach of a 40% cap. It reads the commitment figures each position states and does not forecast capital calls.