Understanding PE Performance Metrics: IRR, TVPI, and DPI
A practitioner's guide to interpreting private equity performance metrics, with benchmark data from 7,000+ funds tracked by LP Data.
The Three Core Metrics
Private equity performance is measured through three metrics: IRR (Internal Rate of Return), TVPI (Total Value to Paid-In), and DPI (Distributions to Paid-In). IRR tells you how fast returns came. TVPI tells you total value created. DPI tells you how much cash you've actually gotten back.
LP Data tracks 7,000+ funds from 1,700+ managers. The benchmark data below comes from pension fund disclosures—audited figures, not self-reported.
Internal Rate of Return (IRR)
IRR is the discount rate that makes the net present value of all cash flows equal to zero. It's an annualized measure sensitive to timing.
LP Data Benchmark (Median IRR by Vintage):
| Vintage | Funds | Median IRR | Top Quartile | Bottom Quartile |
|---|---|---|---|---|
| 2018 | 378 | 13.8% | 19.1% | 8.3% |
| 2017 | 291 | 13.7% | 19.7% | 8.9% |
| 2016 | 289 | 13.8% | 18.9% | 8.1% |
| 2015 | 325 | 13.2% | 19.3% | 8.1% |
| 2014 | 309 | 9.8% | 16.6% | 5.1% |
Interpretation: 2014 shows notably lower IRRs—these funds invested at peak valuations before the energy sector downturn and faced headwinds in their early years.
The catch: IRR rewards speed over size. A fund returning capital in year 2 at 1.3x will show a higher IRR than a fund returning 1.8x in year 7—even though the second fund made you more money.
Total Value to Paid-In (TVPI)
TVPI = (Distributions + NAV) / Paid-In Capital. It measures total value created, both realized and unrealized.
LP Data Benchmark (Median TVPI by Vintage):
| Vintage | Funds | Median TVPI | Top Quartile | Bottom Quartile |
|---|---|---|---|---|
| 2018 | 378 | 1.50x | 1.83x | 1.26x |
| 2017 | 291 | 1.60x | 2.00x | 1.35x |
| 2016 | 289 | 1.64x | 2.06x | 1.30x |
| 2015 | 325 | 1.63x | 2.04x | 1.35x |
| 2012 | 269 | 1.65x | 1.97x | 1.30x |
What this shows: TVPI dispersion widens for older vintages (2015-2012). They include both the big winners and the funds still limping along. The gap between top and bottom quartile is 0.7x+ for mature funds.
Be skeptical of young funds: For anything <5 years old, TVPI depends heavily on GP valuations. NAV marks during bull markets can inflate unrealized TVPI. Wait for DPI before celebrating.
Distributions to Paid-In (DPI)
DPI = Distributions / Paid-In Capital. It measures only realized, cash-on-cash returns.
LP Data Benchmark (Median DPI by Vintage):
| Vintage | Funds | Median DPI | Top Quartile | Bottom Quartile |
|---|---|---|---|---|
| 2018 | 378 | 0.50x | 0.77x | 0.22x |
| 2015 | 325 | 1.05x | 1.32x | 0.63x |
| 2012 | 269 | 1.38x | 1.67x | 1.01x |
| 2008 | 270 | 1.40x | 1.75x | 0.99x |
| 2006 | 313 | 1.33x | 1.66x | 0.82x |
Timeline: A typical fund crosses DPI = 1.0x (full return of capital) around year 7-8. The 2008 vintage shows strong DPI despite the financial crisis because these funds bought cheap during the distress.
Watch out: A 2015 vintage fund with DPI < 0.6x probably has problems. At 10+ years, most value should be realized. If it isn't, something's stuck.
Putting It Together: Fund Comparison
Using all three metrics on real data:
The LP Data database contains multiple observations of the same fund across different pension LPs. Example from 2018 vintage buyout:
| Fund | IRR | TVPI | DPI | Signal |
|---|---|---|---|---|
| Fund A | 15.2% | 1.35x | 0.38x | Standard trajectory |
| Fund B | 13.4% | 1.52x | 1.03x | Strong realizations |
| Fund C | 8.0% | 1.31x | 0.52x | Below median, watch list |
Fund B has lower IRR than Fund A but has already returned capital (DPI > 1.0x). Fund C's 8% IRR with only 0.52x DPI after 6+ years suggests slow exits or markdowns.
Vintage context matters: Compare 2018 funds to the 2018 benchmark (13.8% median IRR, 1.50x median TVPI), not to 2015 or 2020 vintages.