{"id":32221,"date":"2026-01-21T13:37:08","date_gmt":"2026-01-21T18:37:08","guid":{"rendered":"https:\/\/breakingintowallstreet.com\/?post_type=biws_kb&p=32221"},"modified":"2026-01-21T13:37:08","modified_gmt":"2026-01-21T18:37:08","slug":"private-equity-fund-performance-metrics","status":"publish","type":"biws_kb","link":"https:\/\/breakingintowallstreet.com\/kb\/financial-sponsors\/private-equity-fund-performance-metrics\/","title":{"rendered":"Private Equity Fund Performance Metrics: TVPI vs. MOIC vs. DPI and Gross vs. Net IRR"},"content":{"rendered":"

Private Equity Fund Performance Metrics Definition:<\/strong> When evaluating the performance of a private equity (PE) fund, some of the most important metrics include the Total Value to Paid-In Capital (TVPI), or Net Value \/ Called Capital, Distributions to Paid-In Capital (DPI), or (Realizations \u2013 Realized Carried Interest) \/ Called Capital, the Gross MOIC, or Total Gross Value \/ Invested Capital, and the Gross and Net IRR, which measure the annualized returns of the fund before or after fees and carried interest.<\/p><\/blockquote>\n

\"Private<\/p>\n

As you can see, there are many PE fund performance metrics, so people often debate which metric is \u201cbest\u201d for judging funds and making investment decisions\u2026<\/p>\n

\u2026but this is the wrong question to ask.<\/p>\n

The right<\/em> questions to ask are:<\/p>\n

    \n
  1. What stage<\/strong> is the fund at, and which investment strategies is it using (e.g., traditional buyouts vs. growth equity vs. credit)?<\/li>\n
  2. What assumptions<\/strong> support these performance metrics? Is the fund valuing its portfolio companies and awarding compensation based on reasonable data?<\/li>\n<\/ol>\n

    As a simple example, many articles have claimed that Distributions to Paid-In Capital (DPI) is \u201cthe best\u201d metric for evaluating PE fund performance because it measures \u201ccash in vs. cash out\u201d and, therefore, cannot be manipulated in the same way as metrics such as IRR or TVPI.<\/p>\n

    This is because DPI is based on the investments + management fees (cash in) vs. the exit proceeds minus the distributed carried interest (cash out).<\/p>\n

    But the problem is that DPI only means something for funds that are later in their lifecycles, such as for 10-year funds that are in Year 5 or later and are mostly done investing.<\/strong><\/p>\n

    But as an investor in PE funds, you often need to evaluate performance before<\/em> that 5-year mark and make decisions based on the fund\u2019s performance so far.<\/p>\n

    Therefore, metrics such as the TVPI, Gross MOIC, and IRR that factor in realized and unrealized <\/em>gains are extremely important.<\/p>\n

    To illustrate these concepts, we\u2019ll walk through a simplified example of a PE fund\u2019s investment, fee, and exit profile for 10 portfolio companies over a 6-year period.<\/p>\n

    Files & Resources:<\/strong><\/h3>\n