Glossary
Accredited Investor
Individual with a net worth, or joint net worth with spouse or spousal equivalent, that exceeds $1 million (excluding primary residence) or with income in excess of $200,000 (or $300,000 with a spouse or spousal equivalent) in each of the last two years. Source: U.S. Securities and Exchange Commission (SEC), Regulation D, Rule 501.
Capital Call / Drawdown
When a fund requests a portion of an investor’s committed capital to fund an investment or pay expenses.
Carried Interest (Carry)
The profit share the fund manager (GP) earns after meeting the hurdle rate.
Co-Investment
An opportunity for investors to invest directly in a specific deal alongside a private fund, often with reduced fees.
Commitment
The total amount of capital an investor agrees to contribute to a fund during its investment period.
Distribution
Cash or stock returned to investors from the sale or income of investments made by the fund.
Drawdown Structure
A fund model where investor capital is called gradually as deals are found, rather than all upfront.
DPI (Distributions to Paid-In)
Measures how much cash has been returned to investors compared to how much they’ve contributed — a realization metric.
Evergreen Fund
A fund that continuously accepts new capital and redeems investors periodically, rather than having a fixed life.
Fund of Funds (FoF)
A fund that invests in a portfolio of other funds, providing broader diversification across managers, strategies, or geographies.
GP (General Partner)
The manager or investment firm responsible for making investment decisions, managing the fund, and distributing returns.
Hurdle Rate
The minimum return a fund must achieve before the GP can start earning carried interest (performance fees).
Interval Fund
A type of closed-end fund that periodically offers to repurchase a portion of its shares from investors at net asset value, according to a preset schedule (for example, every three or six months). These funds provide more regular liquidity than typical private funds but less than daily-traded mutual funds. They are registered under the Investment Company Act of 1940 and can be available to both accredited and non-accredited investors.
IRR (Internal Rate of Return)
A measure of a fund’s annualized return that accounts for the timing of cash flows (capital calls and distributions).
ITD (Inception to Date)
Refers to performance metrics calculated from the start of the investment or fund’s inception up to the current date.
Liquidity
How easily an investment can be sold or converted into cash. Private market investments are typically illiquid and have long holding periods.
YTD (Year to Date)
Refers to performance calculated from the start of the calendar year up to the current date.
LP (Limited Partner)
The investor in a private fund. LPs commit capital but do not manage the investments.
MOIC (Multiple on Invested Capital)
The total value generated divided by the amount invested. For example, a 2.0x MOIC means the investment has doubled in value.
NAV (Net Asset Value)
The total value of a fund’s assets minus its liabilities — a snapshot of what the fund’s investments are worth at a given time.
Private Credit
Lending to private companies outside of traditional banks or public markets, often with higher yields in exchange for higher risk or lower liquidity.
Private Equity
Investment in private companies (or buyouts of public companies) with the goal of improving operations and eventually selling at a higher value.
Private Markets
Investments made in companies, assets, or funds that are not publicly traded on stock exchanges — examples include private equity, private credit, venture capital, and real assets.
Qualified Client
An investor who meets higher financial thresholds than an accredited investor — generally, $1.1 million in assets under management with the adviser or $2.2 million in net worth (excluding primary residence). Source: U.S. Securities and Exchange Commission (SEC), Rule 205-3 under the Investment Advisers Act of 1940.
Qualified Purchaser
An investor who owns $5 million or more in investments (for individuals) excluding primary residence or business property or $25 million or more (for institutions). Source: U.S. Securities and Exchange Commission (SEC), Section 2(a)(51) of the Investment Company Act of 1940.
Real Assets
Investments backed by tangible assets like real estate, infrastructure, or natural resources.
RVPI (Residual Value to Paid-In)
Shows how much value remains unrealized in the fund relative to the amount invested.
Secondaries
The buying or selling of existing fund interests or portfolio company stakes before the fund reaches maturity.
Tender Offer Fund
A type of closed-end fund that offers limited liquidity by allowing investors to sell (or “tender”) a portion of their shares back to the fund at specific times—typically quarterly, semi-annually, or annually. Unlike mutual funds, these funds do not offer daily liquidity, but they provide a mechanism for periodic redemptions based on the fund’s net asset value (NAV).
TVPI (Total Value to Paid-In)
The sum of DPI and RVPI — representing both realized and unrealized value as a multiple of invested capital.
Vintage Year
The year a fund first begins investing capital — used to compare funds raised in the same market environment.
Venture Capital
Investment in early-stage or high-growth startups, often in exchange for equity ownership.