Strategy Paper: Surface – The Overlooked Asset

Most private fund managers don’t think of themselves as sitting on spare cash.

After all, the defining feature of private funds is deployment. Capital is raised, allocated, invested. The mantra echoes across the industry: idle cash is a liability, not an asset. In many ways, that’s true. Idle capital drags down internal rates of return and tarnishes performance metrics. Cash is, in theory, moved swiftly from commitment to investment, leaving little room for it to linger.

But theory often glosses over reality

Beneath the surface of fund operations, cash is always moving, then settling, pooling and crucially, sitting. Across the lifecycle of any private fund, whether it’s preparing for a capital call, navigating a deal close, or holding distributions, pockets of idle cash shift and settle like the quiet movement of ground beneath the surface. They could be large balances sitting in treasury accounts or multiple small pools of cash scattered across a fund structure, but these pockets are often overlooked or dismissed as fleeting. Yet their cumulative impact can be significant – a silent drag on fund performance that compounds over time.

Private fund managers can no longer afford to sit idly by.

Tides are starting to turn

Much has been said about the increase in dry powder, but this doesn’t alter the fundamentals of cash management. Dry powder represents uncalled commitments, not cash at hand. What does matter is how capital flows. Irrespective of market conditions, cash is always rumbling through the private funds ecosystem, lumbering slowly across continents as capital is drawn, deals are funded, company balance sheets grow, exits materialise and distributions are made.

At the same time, a structural shift is quietly underway. Traditional drawdown models are being supplemented, and in some cases replaced, by new approaches. Private wealth inflows are rising. Fund structures are evolving. Semi-liquid and evergreen models are gaining traction. These bring longer timelines, more frequent inflows, and greater cash visibility requirements. As models shift, the assumptions around cash must shift too.

Wherever you look, the obsession with headline risks continues. AI, competitive pressures, finding new sources of capital, geopolitical risks, market volatility… it’s easy to keep looking up. But sometimes, the most meaningful gains come from looking down. Beneath every fund’s high-level strategy lies a foundation of untapped cash potential.

Who is this for?

This document is designed to help private fund managers surface that value by revealing the hidden power of idle cash and exploring how to elevate it from an overlooked by-product to an active performance booster. It’s essential reading for all senior leaders in private funds, from CFOs and COOs to all finance and operational specialists. In fact, it’s for anyone unwilling to leave value buried in the balance sheet.