DPI TVPI IRR: How to Read AIF Performance

DPI vs TVPI vs IRR: How to Read AIF Performance

DPI TVPI IRR are the three numbers that keep private AIF performance honest. Listed funds train you to watch NAV and trailing returns. Private AIFs need a wider lens.

In one sentence: IRR alone can look great while you have still received little cash back.

This explainer covers DPI, TVPI, RVPI, and IRR for Category I and Category II style private funds. Definitions are industry-standard; scheme report formats can vary.

Pair this with capital calls and the J-curve (why early IRRs often look weak) and PPM in AIF Category 2 (where valuation and fee definitions live).

Why AIF performance needs more than one number

Closed-ended private strategies often:

Call capital unevenly
Mark illiquid holdings infrequently
Return cash only when exits or income events happen
Charge fees before exits arrive

A single percentage cannot capture all of that. Metrics split the story into cash returned, value still inside, and time-weighted efficiency.

This is also why comparing a young Category II AIF to a mutual fund CAGR usually misleads.

DPI TVPI IRR: the core definitions

All ratios below use Paid-In Capital (capital you have actually contributed) as the denominator – not the full undrawn commitment.

Metric	Formula (plain English)	What it tells you
DPI (Distributions to Paid-In)	Cash (and sometimes distributed value) returned ÷ Paid-In	How much you have actually got back
RVPI (Residual Value to Paid-In)	Current NAV / residual value ÷ Paid-In	How much value is still inside the fund
TVPI (Total Value to Paid-In)	(Distributions + Residual Value) ÷ Paid-In	DPI + RVPI – the full multiple
IRR	Time-weighted rate based on dated cash flows	Efficiency of timing – sensitive to when money moved

Rule of thumb identity: TVPI ≈ DPI + RVPI (when defined consistently).

A simple illustrative example

Numbers below are illustrative only – not a real fund.

Assume you paid in ₹100 over time.

Fund has distributed ₹40 in cash → DPI = 0.40x
Remaining NAV is ₹80 → RVPI = 0.80x
TVPI = 1.20x (you are “up” 20% on a multiple basis before thinking about time)

Now add timing: if the ₹40 came back quickly and paid-in was late-weighted, IRR can look strong even while DPI is still below 1.0x. Conversely, a fund can show a modest IRR early while TVPI is building through NAV.

So what: multiples answer “how much”; IRR answers “how fast.” You need both.

What DPI, TVPI and IRR each tell you

DPI – trust the cash

DPI is hard to fake in spirit: money returned is money returned (still watch in-kind distributions and how those are valued).

DPI below 1.0x means you have not yet received your paid-in capital back in distributions.
DPI above 1.0x means cash returned exceeds paid-in – you are in profit on a cash basis, with residual value still extra.

Early funds often show low DPI for years. That can be normal. Late funds with still-low DPI deserve sharper questions.

TVPI – the whole picture

TVPI includes unrealised value. It is useful – and also where optimism can hide.

Ask:

How is NAV marked? Third-party valuation? Manager model?
How often is it updated?
What share of TVPI is DPI (cash) vs RVPI (marks)?

A TVPI of 1.5x that is 0.2x DPI + 1.3x RVPI is a different animal from 1.3x DPI + 0.2x RVPI.

IRR – powerful and easy to misuse

IRR rises when capital is called late relative to exits, distributions arrive early, or the cash-flow schedule is favourable. It falls when fees and early calls dominate before exits.

Common investor mistakes:

Comparing a private fund’s year-2 IRR to a mutual fund’s 3-year CAGR
Preferring the fund with higher IRR but near-zero DPI without checking maturity
Ignoring whether IRR is gross or net of fees and carried interest

For a product-ladder view of when private metrics even apply, see SIF vs PMS vs AIF.

Gross vs net – ask every time

Marketing materials sometimes emphasise gross portfolio IRR. Your experience is closer to net IRR after management fees, expenses, and carry (where applicable).

If a deck does not say gross/net clearly, treat the number as incomplete.

Where the J-curve shows up in DPI TVPI IRR

Early life:

DPI near 0
RVPI building slowly
TVPI may sit near or below 1.0x after fees
IRR often weak

Later life (if exits work):

DPI rises
RVPI may fall as assets exit
TVPI should ideally stay healthy while converting into DPI
IRR often improves if exits are timely

The healthy pattern is TVPI converting into DPI over time – not RVPI forever replacing cash. That conversion is what capital-call timing and exit quality jointly produce.

Questions to ask with a factsheet

Are IRR / multiples net of fees and carry?
What is DPI, RVPI, TVPI as of the latest reporting date?
What % of TVPI is unrealised?
Valuation policy in one paragraph?
Realised vs unrealised track record of prior funds?
Any recallable distributions or recycling that affects how “paid-in” is counted?

Primary rules for what Category I/II funds can and cannot do sit in the SEBI AIF Regulations, 2012 – performance maths is industry practice layered on top.

Risks of metric shopping

Mark risk: private NAV is not exchange price.
Vintage risk: comparing a 2019 fund to a 2024 fund on IRR alone is unfair.
Strategy risk: private credit may show income earlier than buyout PE – different DPI paths.
Currency risk (GIFT / USD products): multiples in USD vs INR change the household story. See also currency risk for NRIs.

Who this may suit

Investors committing to Category I/II style vehicles who want a reporting vocabulary that matches illiquid cash flows – including anyone comparing a live scheme such as a Category II growth AIF review.

Who should skip deep private metrics

If you need monthly liquidity and public marks, mutual funds / many listed strategies may fit better than closed-ended AIFs. The metrics above exist because the product is illiquid and privately valued.

What investors often miss

A high IRR with low DPI in year three can mean “marks and timing look good on paper” – or “cash has not come back yet.” Neither interpretation is automatic. Force the conversation onto DPI trajectory and valuation quality, not a single hero percentage.

Tax character of Category II income is a separate lens – see Section 115UB in plain English.

FAQs

Is TVPI the same as MOIC?

Often used in related ways (value multiple on invested capital). Definitions can differ slightly by firm. Ask how they define it.

What is a “good” DPI?

There is no universal good number without vintage and strategy. Compare against the fund’s age and peers, not against listed equity.

Can DPI fall?

Cash already distributed does not usually reverse, but recallable distributions (if allowed) and reporting restatements can complicate totals. Read the PPM.

Why is my IRR negative when TVPI is above 1?

Timing of contributions vs valuation dates can create temporary disconnects. Also check if IRR includes fee cash flows that TVPI presentation treats differently.

Should I ignore IRR completely?

No. Ignore IRR alone. Use IRR with DPI/TVPI and fund age.

Do open-ended Category III AIFs use DPI the same way?

Less often as the primary lens; many investors watch NAV returns more like liquid funds. Still ask how performance and fees are reported.

Where do I find these numbers?

Investor reports, capital account statements, and sometimes factsheets. If a scheme never reports DPI/TVPI for a closed-ended private strategy, that itself is a diligence signal.

When you next open an AIF update, read DPI and TVPI before you celebrate or panic about IRR.

Key takeaway

IRR answers “how efficient was the timing of cash?” DPI answers “how much cash have I actually received?” TVPI answers “what is the whole picture including remaining NAV?” Early in a fund’s life, obsessing over IRR alone is usually the wrong habit.