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CFA Level I · CFA Level I Exam · Investments in Private Capital: Equity and Debt

A limited partner in a private equity fund reviews the fund's performance report. The fund has called 80% of committed capital, and distributions to date equal 20% of committed capital. The remaining holdings are valued at 90% of committed capital. Which metric is most likely described by the ratio of distributions to paid-in capital?

The ratio of distributions to paid-in capital is DPI. It shows how much cash has actually been returned to investors relative to capital contributed, so it captures realized performance only. RVPI covers unrealized value, and TVPI combines the realized and unrealized parts.

  1. ADPI (distributed to paid-in capital)Correct
  2. BRVPI (residual value to paid-in capital)
  3. CTVPI (total value to paid-in capital)

Explanation

DPI is cumulative distributions divided by paid-in capital, so it measures the realized return to date. RVPI uses the residual (unrealized) value in the numerator, and TVPI is the sum of DPI and RVPI.

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