7 Numbers That Matter (and 3 That Mislead) on an AIF Factsheet

1. Net IRR (since inception)
IRR is the annualised return on the cash you have put in, which makes it the most quoted number on any factsheet. Check that it is net, meaning after management fees, performance fees (carry) and fund expenses. A net figure is what you actually earn. Also check that it is measured from the fund’s first drawdown, not from a convenient later date.

2. DPI (Distributions to Paid-In capital)
DPI is the cash returned to investors divided by the capital they have paid in. A DPI of 0.4x means you have received 40 paise back for every rupee invested. It is the hardest number to flatter because it only counts money that has actually left the fund. A fund can show a high IRR and a DPI near zero, and in that case you are still waiting for proof.

3. TVPI (Total Value to Paid-In capital)
TVPI adds the distributions to the remaining value of the portfolio, then divides by paid-in capital. It shows the total value created so far, realised and unrealised. Read it together with DPI. The gap between the two is the share of value that exists only as a valuation.

4. RVPI, or the realised vs unrealised split
RVPI is the unrealised portion of TVPI (TVPI = DPI + RVPI). If most of the value sits in RVPI, the returns depend on future exits and on the valuation methodology. That is not necessarily bad in a young fund. It becomes a concern in a fund that is several years old.

5. Capital called vs capital committed
In India, AIF investors commit capital, with a minimum of ₹1 crore, and the manager draws it down in tranches. The percentage called tells you how deployed the fund is and how much more you may be asked to fund. It also affects how you read every other number, because IRR and multiples are calculated only on the capital that has been called.

6. Fees, hurdle and carry
Look for the management fee percentage and what it is charged on (committed or invested capital). Look for the hurdle rate, the return the fund must clear before carry applies, and the carry percentage. Add other expenses and you have the real cost of the fund. A one-percentage-point difference in annual fees compounds noticeably over a 7 to 10 year fund life.

7. Concentration and fund age
Two figures belong together here. The first is portfolio concentration: the number of holdings and the share of NAV in the top five. A fund with three large positions behaves very differently from one with thirty. The second is vintage and remaining tenure: when the fund started, how long it runs, and whether extensions are possible. Together they tell you how much risk you carry and how long your money may be locked up.

A quick worked example. Suppose you commit ₹1 crore. The fund has called ₹60 lakh (60% called), returned ₹15 lakh, and your holding is currently valued at ₹70 lakh.

• DPI = 15 ÷ 60 = 0.25x
• RVPI = 70 ÷ 60 = 1.17x
• TVPI = (15 + 70) ÷ 60 = 1.42x

A TVPI of 1.42x looks healthy. But only 0.25x of it has been returned in cash, so most of that value still depends on future exits.

1. Gross or “target” returns
A line like “targeting 18–20% returns” is an aspiration, not a result. Gross returns ignore fees, carry and expenses, so they overstate what reaches you. Always look for realised or net figures, and treat any target as marketing.

2. IRR on a young fund
Early in a fund’s life, IRR can look spectacular or terrible for reasons that have little to do with skill. Annualising a quick early markup over a short period produces a large number. Fees, meanwhile, drag returns down in the first years (the “J-curve”). Judge a fund’s IRR only after it has had enough time and enough realisations to mean something.

3. The headline exit multiple
“Exited Company X at 6x” may be true and still tell you little. One star exit can sit beside several weak or unrealised investments. Ask what the multiple was on, what share of the fund that investment represented, and what the fund-level return is. The fund-level DPI and net IRR are what you actually earn. A single deal is just one data point.

How to read all this together

No single number is enough. A sensible read goes like this:

1. Start with net IRR and DPI to see what has been earned and returned.
2. Check TVPI and RVPI to see how much depends on valuations.
3. Look at fees, concentration and tenure to understand cost, risk and lock-up.
4. Treat gross, target and best-deal figures as context, not evidence.

If a factsheet leaves out DPI, or shows only gross returns, ask the manager for the missing figures before you commit.

Disclaimer: This article is for general information only and is not investment advice. Investments in AIFs are subject to market and other risks, and past performance is not indicative of future results. Please read the Private Placement Memorandum and consult your advisor before investing.