What required return should you actually enter?
It's the input that moves your price more than anything else on the page — more than which of the six models you choose — and it's the one number we can't pick for you, because it describes you, not the fund. Here are two tables to anchor on instead of leaving it at 15%.
Why this field, and not the model, is the decision
People spend a long time choosing between Takahashi–Alexander, Bayesian, Cohort, Ledger and Bootstrap, and about four seconds on the Required Target Return box. That's backwards. Across every live fund we price, moving the required return from 10% to 20% takes the median price from 0.73x of NAV to 0.52x. No model choice on the page does anything remotely that large.
The reason is mechanical. A secondary is a claim on a stream of future distributions. The required return is the rate you discount that stream at. Raise it and the same stream is worth less to you — not because the fund changed, but because you got pickier.
So the required return is not a forecast. It isn't your estimate of what the fund will return. It's the return you need in order to justify the purchase — your hurdle. The fund's expected return is what the model computes. Confusing the two is the single most common way to get a meaningless number out of this tool.
Anchor 1: what does paying full NAV actually buy you?
Start here, because it reframes the whole question. For every fund we price, we can solve for the annual return you'd earn if you paid exactly 1.00x of its current reported NAV. Across the live universe:
| Percentile | P10 | P25 | Median | P75 | P90 |
|---|---|---|---|---|---|
| Annual return at 1.00x NAV | −9.8% | −5.6% | −0.0% | +4.2% | +6.7% |
Every fund in the live pricing universe (n=794), assuming a 13-year wind-down.
The median fund, bought at its carrying value, returns you approximately nothing. A quarter of them lose money at that price.
That is the entire case for buying at a discount, in one number. It also sets your floor: any required return above roughly zero implies a price below NAV, and the further above, the deeper the discount. The question was never "should I discount" — it's "how much".
It differs by strategy, and the ordering may surprise you
| Strategy | Median return at 1.00x NAV | Funds |
|---|---|---|
| Infrastructure | +5.5% | 24 |
| Growth | +1.4% | 215 |
| Venture | +0.8% | 64 |
| Buyout | −1.2% | 239 |
| Balanced | −2.0% | 236 |
Infrastructure marks are the ones currently offering something at par; buyout and balanced marks are not. If you use the same hurdle across a mixed portfolio, you are implicitly demanding a much deeper discount from infrastructure than from buyout, relative to what each is actually offering. That may be what you want. It should be deliberate.
Infrastructure's n=24 is thin — treat that row as indicative rather than settled.
Anchor 2: the translation table
What each answer costs you. Median price as a percentage of current NAV, across every fund we price:
| You require | Median price | P25 | P75 |
|---|---|---|---|
| 5% | 0.88x | 0.78x | 0.96x |
| 8% | 0.79x | 0.68x | 0.87x |
| 10% | 0.73x | 0.62x | 0.84x |
| 12% | 0.68x | 0.55x | 0.81x |
| 15% | 0.61x | 0.46x | 0.78x |
| 18% | 0.56x | 0.38x | 0.75x |
| 20% | 0.52x | 0.35x | 0.73x |
| 25% | 0.44x | 0.25x | 0.69x |
n=794 funds at each rate, 13-year wind-down. Read it in either direction: pick a hurdle and see the price, or start from a price you've been quoted and read off the return it implies.
That second direction is the useful one in a live negotiation. If you're shown a book at 0.68x, that's roughly a 12% annual return on our numbers. Whether 12% is enough is your decision — but it's now a decision, not a vibe.
So what do you enter?
Work down this list and stop at the first one you can actually answer.
- The return you are accountable for. If you run a fund with a stated target net return, or a mandate with a hurdle, use it. It's the number you'll be measured against, so it's the number that should set your price.
- Your opportunity cost. What would this capital earn in your next-best available use? If you'd otherwise commit it to a primary fund you underwrite at 13%, then 13% is your hurdle here, plus whatever extra you demand for taking on a stake you can't easily resell.
- A market-observed rate. Institutional secondaries buyers commonly underwrite LP stakes in the mid-to-high teens. If you have no internal number, starting at 15% puts you roughly where the professional bid sits — which is exactly why it's our default.
Three ways people get this wrong
Entering the fund's target return. A buyout fund targeting 20% gross is not telling you your hurdle. That's the GP's marketing number, it's usually gross of fees, and for a fund that's already six years in it has frequently not materialised. Using it makes you demand a discount for a return that was never yours.
Setting it so high nothing is ever buyable. At 25% the median fund prices at 0.44x. If your hurdle implies a price no seller will ever accept, you don't have a pricing problem, you have a strategy that doesn't transact. That's a legitimate choice, but make it knowingly.
Tuning it until you like the answer. The required return is an input about you and shouldn't move fund to fund. If you find yourself adjusting it per deal to land on a price you already wanted, you're not pricing — you're justifying. Set it once, apply it across the book, and let the prices differ because the funds differ.
One thing it should not absorb
It's tempting to raise the required return to account for a fund you find risky. Be careful: our price already comes with a P25–P75 band, and that band is where fund-specific uncertainty is expressed. Inflating the hurdle on top of a wide band double-counts the same risk, and it does so invisibly. If a fund worries you, the honest response is to buy nearer the P25 than the P50 — not to quietly move your hurdle for that one name.
Our published coverage isn't uniform either, so check how well the band holds for that fund's group before leaning on it.
The short version
Paying NAV earns you about nothing. Your required return is how much better than nothing you need. Every 5 points of hurdle costs the seller roughly 10 points of price — more at the low end (14 points going from 5% to 10%), less at the high end (7 points from 20% to 25%). Pick it once, from what you're accountable for, and apply it to everything.
Reproduce these numbers: python scripts/required_return_reference.py
Every model figure on this page is regenerated by that command from the same
artifacts the product prices from — so it can be checked, not just
cited.
Research and software, not investment advice — see the disclaimer.