Investment fund liquidity solutions can take many forms, but two of the most flexible financing options are asset-based net asset value (NAV) facilities and structured preferred equity. The two options have key differences, particularly given that a NAV facility is a debt solution while preferred equity is a quasi-equity solution. There are, however, many similarities between the two, including their shared trajectory from being niche alternatives just a few years ago to mainstream liquidity tools today – particularly during the coronavirus pandemic and the associated market dislocation. In a guest article, Kirkland & Ellis partners Robert Emerson, Susannah Amini and Jacqueline Eaves review certain scenarios under which a sponsor may wish to compare and contrast the benefits and limitations of NAV facilities and preferred equity at the fund level to select the most appropriate structure. In particular, the article evaluates both options as flexible and tactical liquidity tools for sponsors to actively manage their portfolios. See our two-part series on liquidity options for PE funds: “Potential Capital Sources, GP‑Led Restructurings and Alternative Paths Available to Sponsors” (Sep. 15, 2020); and “Preferred Equity Lines, Top‑Up Funds and NAV Credit Facilities” (Sep. 22, 2020).