Private-market returns are described with a small alphabet soup of acronyms — IRR, MOIC, DPI, TVPI, RVPI — and they're easy to confuse. Each measures something different, and a fund can look strong on one and unremarkable on another. Whether you're an LP evaluating a manager or a GP reporting to investors, knowing what each metric captures (and what it hides) is essential. Here's the plain-English version.

The two families of metrics

Performance metrics fall into two groups: multiples, which tell you how many times your money grew, and rates, which tell you how fast. Multiples ignore time; rates account for it. You need both to see the full picture.

The multiples: MOIC, TVPI, DPI, RVPI

MOIC — Multiple on Invested Capital

MOIC is the simplest multiple: total value divided by capital invested. A 3x MOIC means the investment is worth three times what was put in. It's typically used at the deal level and can be gross (before fees and carry) or net (after). MOIC says nothing about how long it took to get there.

TVPI — Total Value to Paid-In

TVPI measures the fund's total value — cash already distributed plus the value still held — against the capital LPs have paid in. A 2.0x TVPI means every dollar paid in is now worth two dollars in combined realized and unrealized value. TVPI is the headline "how is the fund doing overall" number.

DPI — Distributions to Paid-In

DPI counts only the cash actually returned to investors relative to what they paid in. It's the realized, money-in-the-bank figure. A 1.0x DPI means investors have received back exactly what they put in; anything above 1.0x is realized profit. DPI is sometimes called the "cash-on-cash" measure and is the hardest number to dress up.

RVPI — Residual Value to Paid-In

RVPI captures the unrealized side: the value still held in the portfolio relative to paid-in capital. It's the "paper" value that hasn't been converted to cash yet.

The key relationship

These three fit together in one clean equation:

TVPI = DPI + RVPI

In other words, total value equals what's been distributed (realized) plus what's still held (unrealized). Early in a fund's life, RVPI dominates — most value is still on paper. As the fund matures and exits happen, value shifts from RVPI into DPI. A mature fund with high TVPI but low DPI is a yellow flag: the returns are still unrealized marks, not cash.

The rates: IRR

IRR — Internal Rate of Return

IRR is the annualized return that accounts for the timing and size of every cash flow in and out. Because it's time-sensitive, returning capital quickly produces a higher IRR than returning the same multiple slowly. This is IRR's strength and its weakness: it rewards speed, which can make short, early wins look spectacular, and it can be influenced by the timing of capital calls. IRR is best read alongside a multiple, never alone.

How they work together

Consider two deals that both return 2x (MOIC 2.0x). One takes two years; the other takes eight. The multiples are identical, but the two-year deal has a far higher IRR. Now consider a fund reporting a 2.5x TVPI but only 0.4x DPI: impressive on paper, but investors have seen little cash back. The metrics only mislead when read in isolation — together they tell you how much, how fast, and how much of it is real.

Which metric matters when

• Early fund life: TVPI and IRR indicate potential, since most value is unrealized.

• Mid-life: Watch the shift from RVPI toward DPI — it shows the manager is actually returning capital.

• Mature or closed funds: DPI is decisive. Realized cash is what LPs ultimately keep.

Where Allocations fits

Clean metrics depend on clean underlying data — accurate contributions, distributions, and valuations tracked over time. Allocations records the cash flows and positions for each SPV or fund and surfaces performance to investors, so LPs see consistent, up-to-date figures rather than reconciling spreadsheets by hand.

Frequently asked questions

What is the difference between IRR and MOIC?

IRR is an annualized return that accounts for timing, so faster returns raise it. MOIC is a simple multiple of money returned versus invested and ignores timing. A deal can have a high MOIC but modest IRR if it took years, or a high IRR but low MOIC if it returned quickly.

What does TVPI mean?

TVPI (Total Value to Paid-In) measures total value — cash distributed plus remaining value held — relative to capital paid in. TVPI equals DPI plus RVPI.

What is the difference between DPI and TVPI?

DPI counts only cash actually returned to investors (realized gains). TVPI adds the unrealized value still held. DPI is cash in hand; TVPI includes paper value.

Which fund performance metric matters most?

It depends on stage. Early on, TVPI and IRR signal potential; as a fund matures, DPI matters most because it reflects real cash returned rather than unrealized marks.

Allocations Securities, LLC (dba AllocationsX) is a member of FINRA and SIPC. This article is for informational purposes only and does not constitute investment, legal, or tax advice. Past performance is not indicative of future results.