TVPI vs DPI vs RVPI vs IRR — The Complete AIF Performance Metrics Glossary

Four acronyms, four genuinely different questions about a fund's performance — and mixing them up is the single most common way investors misread a fund's actual track record.

Why These Four Metrics Exist Separately at All

A private fund's performance can't be captured by a single number the way a listed mutual fund's NAV growth can, because a private fund's capital comes back to investors in irregular distributions over years, and a meaningful chunk of "value" at any given point is still unrealised, sitting in portfolio companies that haven't exited yet. TVPI, DPI, RVPI, and IRR each answer a different piece of that puzzle, and a fund can look excellent on one and mediocre on another at the same point in its life.

DPI — Distributions to Paid-In Capital

DPI measures actual cash returned to investors, divided by capital they've actually paid in: DPI = Total Distributions ÷ Total Paid-In Capital. This is the only one of the four metrics measuring money an investor has genuinely received — everything else involves some element of estimate or projection. A DPI of 1.0x means investors have gotten their original capital back in cash; anything below that, however impressive the fund's reported valuation, means the investor hasn't yet been made whole.

RVPI — Residual Value to Paid-In Capital

RVPI measures the value of what's still held inside the fund but not yet distributed, divided by paid-in capital: RVPI = Residual (Unrealised) Portfolio Value ÷ Total Paid-In Capital. This number is only as reliable as the fund's valuation methodology for its unrealised holdings — a fund reporting a high RVPI on aggressive internal marks is a materially different proposition from one reporting the same RVPI figure backed by recent third-party financing rounds or comparable transactions.

TVPI — Total Value to Paid-In Capital

TVPI is simply DPI plus RVPI combined: TVPI = (Distributions + Residual Value) ÷ Paid-In Capital. It's the most commonly quoted headline number precisely because it captures the fund's full value story — realised and unrealised — in one figure. But that's also its weakness: a fund can post an eye-catching TVPI almost entirely from unrealised, self-marked portfolio value, with a DPI near zero. Reading TVPI without checking the DPI/RVPI split underneath it is how investors get surprised by funds that look strong on paper right up until an exit doesn't materialise at the marked value.

IRR — Internal Rate of Return

IRR is the only metric on this list that accounts for the timing of cash flows, not just their magnitude — it's the discount rate at which the net present value of all cash flows (capital calls out, distributions in, plus residual value at the measurement date) equals zero. Two funds with identical TVPI can have very different IRRs if one returned capital faster than the other, because IRR rewards speed of capital return as much as magnitude. This is also why IRR is the metric most susceptible to manipulation through timing — a fund that draws capital late and distributes early (even modest amounts) can post an inflated IRR relative to its actual multiple of money returned.

Reading These Four Together, Not in Isolation

The practical discipline for any AIF investor: never evaluate a fund on a single metric in isolation. A high TVPI with a low DPI signals a fund still heavily reliant on unrealised marks. A high IRR with a modest TVPI signals a fund that's been quick to return capital but hasn't necessarily generated outsized absolute value. The combination — DPI, RVPI, and IRR read together — tells a far more complete and honest story than any one number quoted alone in a pitch deck.

Bringing This Into Actual Investment Decisions

Understanding these metrics is one thing; using them correctly to evaluate a specific fund's actual track record — including checking the valuation methodology behind an RVPI figure — is where most of the real analytical work happens. We help investors and fund managers alike interpret and present these metrics with the rigour they deserve.

This article is for general informational purposes and does not constitute investment advice.

CA Anuj Desai