Portfolio glossary
The vocabulary of private-markets reporting, defined without the hand-waving. These are the terms that show up on the statements we parse, and the ones that cause the most disagreement between sources.
Performance metrics
- IRR (internal rate of return)
The annualised discount rate at which a position's cashflows, including its remaining value, net to zero.
IRR is the only headline metric that accounts for timing: money returned early is worth more than the same money returned late. That sensitivity is also why three sources rarely agree on it. The formula is not in dispute; the cashflow set and the as-of date usually are. A net IRR is calculated after fees and carry, a gross IRR before, and the two are not comparable.
- TVPI (total value to paid-in)
Distributions plus remaining value, divided by the capital actually paid in.
TVPI is the total multiple: what the position is worth in all, per euro invested. It ignores timing entirely, so a 2.0x earned in three years and a 2.0x earned in twelve look identical. Because it includes unrealised value, it is only as reliable as the manager's latest NAV mark.
- DPI (distributions to paid-in)
Cash actually distributed, divided by the capital actually paid in.
DPI is the realised part of TVPI, and the hardest number to argue with: it counts only money that has left the fund and reached the investor. A fund with a strong TVPI and a DPI near zero has produced marks, not proceeds. DPI is also called the realisation multiple.
- RVPI (residual value to paid-in)
Remaining unrealised value, divided by the capital actually paid in.
RVPI is the unrealised half of the ledger, and TVPI is simply DPI plus RVPI. Early in a fund's life almost all of the multiple sits in RVPI; by the end, a healthy fund has moved nearly all of it into DPI.
- MIRR (modified internal rate of return)
An IRR variant that sets explicit rates for reinvesting distributions and financing calls.
Plain IRR implicitly assumes cash returned early is reinvested at the IRR itself, which flatters funds with quick early exits. MIRR replaces that with a stated reinvestment rate and finance rate, and always gives a single answer. It is less common in GP reports, and more honest when comparing funds.
- J-curve
The shape a fund's returns trace over its life: negative early, positive later.
Fees and drawdowns come first while investments are still held at cost, so early IRR is usually negative. As holdings are marked up and exits start returning cash, the curve crosses into positive territory. Judging a young fund on its IRR mostly measures where it sits on this curve.
Cashflows and capital
- Commitment
The total amount an investor has contractually agreed to provide to a fund over its life.
A commitment is a promise, not a payment. It is drawn down over the investment period through capital calls, and it is normal for a fund never to call the full amount. Unfunded commitment (the part not yet called) is the liquidity obligation a family office has to plan around.
- Unfunded commitment
The part of a commitment a fund can still call: commitment minus capital called against it, plus recallable distributions.
It is the liquidity a family office has to keep available for each fund, and the number liquidity planning stands on. Most spreadsheets get it wrong in the same two places: they forget recallable distributions, and they subtract fees that the LPA charges outside the commitment.
- Capital call (drawdown)
A manager's notice requiring investors to pay in part of their commitment by a set date.
The notice states the amount, the due date, and usually what the money is for: investments, fees, or expenses. Calls arrive with little warning and short deadlines, which is why the unfunded commitment across a portfolio has to be tracked as a live number rather than reconstructed at quarter end.
- Distribution
Cash or securities returned to investors from a fund's realisations or income.
Distributions can be return of capital, gain, or income, and the split matters for both DPI and tax. Some are recallable, meaning the manager may draw the same money again. Recallable distributions that are counted as final quietly overstate DPI.
- Recallable distribution
A distribution the fund is allowed to call back, usually within a set period.
Typically proceeds from a short-held investment or capital that was called and not needed. The distribution notice says which part is recallable, and that part goes back into unfunded commitment. Booked as final, it leaves unfunded understated by exactly that amount, until the fund calls it.
- Paid-in capital (contributed capital)
The portion of a commitment that has actually been called and paid.
Paid-in capital is the denominator of TVPI, DPI and RVPI, so a disagreement about which contributions count (management fees paid outside the fund, for instance) moves every multiple at once. It is the single most common source of a mismatch between an investor's own numbers and the manager's.
- Equalisation
The catch-up payment an investor makes when joining a fund at a later closing.
A late investor pays in its share of everything already called, so all investors end up having funded the same percentage. On top comes an equalisation interest that compensates the earlier investors. The catch-up counts against the commitment; the interest usually does not.
- Management fee
The annual fee a fund pays its manager, usually a percentage of commitments and later of invested capital.
Around two per cent is common for private equity during the investment period, stepping down afterwards. Whether fees are called against the commitment or on top of it is set in the LPA, and it changes both unfunded commitment and paid-in capital, so it matters for every multiple built on them.
- Carried interest
The manager's share of a fund's profits, typically 20% above a hurdle rate.
Carry is why gross and net returns diverge, and the waterfall that governs it (whether it is calculated deal by deal or on the whole fund, and whether a preferred return has been cleared) determines when the manager is actually paid. Net figures are the only ones an investor should compare across funds.
- Hurdle rate (preferred return)
The return investors must receive before the manager earns carried interest.
Eight per cent a year is the common figure in private equity. Once investors have their capital back plus the hurdle, a catch-up usually gives the manager a larger share until it has its full carry percentage of the profits. A hurdle delays carry; it rarely reduces it.
- Distribution waterfall
The order in which a fund splits its proceeds between investors and manager.
Usually: return of capital, then the hurdle, then the manager's catch-up, then the agreed split. In a European, whole-fund waterfall the manager earns carry only after the entire fund has returned capital and hurdle; in an American, deal-by-deal one it can earn carry earlier, often with a clawback if later deals disappoint.
Structures and documents
- Capital account statement
The manager's quarterly statement of one investor's position: opening balance, contributions, distributions, fees, allocated gains, and closing balance.
This is the authoritative record of an LP position, and the document most portfolio numbers ultimately derive from. It arrives as a PDF, in a different layout from every other manager, which is why extracting it reliably is a document problem before it is a finance problem.
- Vintage year
The year a fund made its first investment, or in some conventions held its first close.
Vintage is the basis for any fair comparison between funds, because market conditions dominate returns within a given year. Definitions differ between data providers, so a fund can appear under two different vintages in two benchmarks.
- SPV (special purpose vehicle)
A legal entity formed to hold a single investment or a defined group of them.
SPVs are common for direct deals and co-investments: several investors pool into one vehicle that holds one company. For reporting they add a layer, the position you hold is in the SPV, while the exposure you care about is the company underneath it, and consolidated views have to look through.
- Co-investment
A direct investment alongside a fund in one of its deals, usually through an SPV.
Co-investments typically carry lower or no management fee and carry, which is why family offices ask for them. They also concentrate risk in a single company and arrive at short notice. Recorded separately from the fund stake in the same company, they hide how much is really in it.
- LP and GP (limited and general partner)
The investor in a fund, and the manager who runs it.
Limited partners provide the capital and have limited liability and no role in day-to-day decisions. The general partner makes the investments, calls the capital, produces the reporting, and earns management fees and carried interest. Almost everything a family office receives in the post is the GP reporting to it as an LP.
- Schedule K-1
The US tax form on which a partnership reports each partner's share of income, deductions and credits.
K-1s arrive late, often after filing deadlines, and their figures follow tax rules rather than the capital account statement's accounting, so the two rarely tie out exactly. Any investor with US fund exposure ends up reconciling both.
- LPA (limited partnership agreement)
The contract governing a fund: its economics, its powers, and its obligations to investors.
The LPA is where fee terms, the waterfall, the investment period, recallable distributions and reporting obligations are actually defined. Nearly every disagreement about a number ends in the LPA, which is why keeping it alongside the statements is worth more than it looks.
- Secondary
The purchase of an existing fund interest, or a portfolio of them, from another investor.
A secondary buyer takes over both the position and the remaining unfunded commitment, usually at a discount or premium to the last reported NAV. Because the entry price differs from the original paid-in capital, the buyer's multiples and the seller's describe the same asset with entirely different numbers.
- SAFE (simple agreement for future equity)
An early-stage investment that converts into shares at the next priced round.
A SAFE has no interest and no maturity date. It converts at a valuation cap, a discount to the round price, or both. Until then there are no shares to count, so a register that records a SAFE as equity, or values it at the cap, distorts every metric built on it.
- Convertible note (Wandeldarlehen)
A loan to a company that converts into shares at a later financing round.
Unlike a SAFE it carries interest and a maturity date, and the accrued interest usually converts with the principal. In German early-stage deals the Wandeldarlehen is the common form. Until conversion it is a loan on the investor's books, with interest to accrue, not a shareholding.
Software
- MCP (Model Context Protocol)
An open standard for connecting AI assistants to external systems and data.
An MCP server exposes a system's data and actions in a form assistants such as Claude and ChatGPT can call directly, with authentication and permissions intact. Wealth Management by Zahlenwerk ships one, which is what lets an investor query their own portfolio from the assistant they already use rather than exporting to a spreadsheet first.
See these numbers on your own portfolio
Wealth Management by Zahlenwerk computes them from the statements you forward in, and keeps every figure traceable to the document it came from.
Join the waitlistSee what it does