Why investors pay attention to valuation standards

A growing share of institutional portfolio value is expressed not in traded prices but in valuations. Private equity, private credit, infrastructure and real assets all report performance through estimates prepared at a point in time, and the investors who allocate to these strategies read those estimates in everything from net asset values to fee calculations. The credibility of the numbers depends less on where markets sit than on how the figures were produced — which is why valuation standards have become an investor concern, not only a valuer’s one.

The number behind the net asset value

In less liquid or harder-to-observe markets, robust valuation governance matters most. The International Valuation Standards (IVS) give that governance a structure: General Standards running from IVS 101 Scope of Work and IVS 102 Bases of Value through to IVS 106 Documentation and Reporting, supplemented by Asset Standards covering businesses, intangible assets, financial instruments, real property and more. The architecture means a valuation can be interrogated at every stage — what was asked, on what basis, using which approach, supported by which data, and reported how. For an investor doing diligence on a manager, those are precisely the questions worth asking.

One framework across borders

Institutional portfolios are rarely confined to a single jurisdiction, and a valuation prepared in one market is routinely read in another. IVS is used as a framework in more than 100 countries, and IVSC member organisations operate across 137 countries. For an investor comparing funds domiciled in different regions, a common framework reduces the translation problem: the same vocabulary of bases, approaches and disclosures applies wherever the work was done.

An investor seat at the table

Standard-setting is not a spectator activity. The IVSC Investor Forum, established in 2023 and chaired by Doug McPhee, brings together valuation leaders from major institutional investors collectively managing more than USD 20 trillion in assets. Meeting under the Chatham House Rule, it allows candid discussion of where valuation practice serves investors well and where it falls short — and channels that perspective into how the standards develop. The forum’s existence is itself a signal: the people who rely on valuations have a structured way to shape the rules that govern them.

Standards inside the benchmark

Standards also reach investors indirectly, through the measurement infrastructure they depend on. MSCI’s Global Data Standards for Real Estate Investment, for example, adopt the IVSC’s valuation standards as the preferred basis for reporting capital and rental values for performance measurement purposes. The preference is exactly that — a recommended basis rather than a requirement — but it shows how benchmark providers look to common valuation standards when comparability is the product being sold.

Confidence includes uncertainty

None of this implies that valuations can be made precise. The IVSC’s Perspectives Paper Managing and Communicating Value Uncertainty, published in May 2026, makes the point directly: value uncertainty is inherent in valuation, not a failure of it, and even a fully IVS-compliant valuation may support a range of credible outcomes. The paper distinguishes valuation risk — errors of process, which can be mitigated — from value uncertainty, which must be managed and disclosed. For investors, that transparency is the point. Knowing how confident a valuer is in a number, and why, strengthens rather than weakens confidence in the manager reporting it.