Measuring Performance and Reading a Track Record

Private equity performance combines cash flows with valuations of assets that remain unsold. Those inputs answer different questions. Distributions show what investors have received. Net asset value estimates what remains. A performance metric should identify which of those quantities it contains.

The initial distinction is gross versus net. Gross investment returns may omit fund-level fees, carry, expenses, or other effects. Net investor returns include the relevant economic deductions under the stated methodology. Compare like with like, and document the treatment of financing and subscription facilities.