CFA Level I · CFA Level I Exam · Alternative Investment Performance and Returns
Compared with TVPI, the DPI of a private equity fund is most likely to be a more appropriate measure when an investor wants to assess:
DPI is best for assessing how much of the paid-in capital has actually been returned to investors in cash. It excludes unrealized residual value, so it avoids reliance on the general partner's valuations, unlike TVPI, which includes them.
- Athe fund's total value including unrealized holdings
- Bthe portion of capital already returned in cashCorrect
- Cthe value of the general partner's carried interest
Explanation
DPI uses only realized cash distributions, so it is unaffected by subjective valuations of unrealized holdings. TVPI includes residual value and so reflects total value. Neither measure directly gives the carried interest value.
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