Evergreen funds are open-ended, meaning they do not have a fixed end date and are designed to provide ongoing access to private market strategies. Capital is invested continuously over time rather than during a single fundraising period. These funds may offer periodic opportunities for investors to add capital or request redemptions, subject to fund terms, liquidity provisions, and potential limitations. This structure is intended to provide investors with greater flexibility and a more consistent investment experience while maintaining long-term exposure to private markets.
Because of this structure, evergreen performance is most clearly understood through total return. Total return captures the full economic experience of an investment over a given period. For evergreen funds, total return has two straightforward components:
The fund's reported net asset value represents the current valuation of the portfolio and appears in each periodic performance report. NAV movement (or appreciation) reflects the change in the fund’s NAV over the period, capturing portfolio performance after expenses.
Cash paid out from the fund during the period.
Drawdown funds follow a different lifecycle. Capital is committed upfront, drawn down over time, and returned through distributions as investments are held and ultimately realized. Because cash flows occur at different points over the life of the fund, performance measurement must account for both timing and magnitude.
As a result, drawdown performance is typically communicated using internal rate of return (IRR) and multiples. IRR measures the annualized rate of return that equates all cash outflows (capital invested) and inflows (distributions and remaining value) over time. IRR is commonly reported on both a gross and net basis, reflecting performance before and after the impact of fees and expenses.
Gross IRR reflects performance at the investment or portfolio level before fees and expenses.
Net IRR reflects performance after management fees and carried interest and represents the return experienced by investors.
Net IRR is the most commonly referenced headline metric for drawdown funds because it incorporates both investment outcomes and the economic structure of the fund.
While IRR captures the effect of timing, investment multiples focus on magnitude, or how much value has been created relative to the amount of capital invested. Multiples answer a straightforward question: How many dollars of value were generated for every dollar invested?
Multiple on Invested Capital, or MOIC, is a common measure of total value created relative to capital invested. It shows how many dollars of value are generated for each dollar invested and can be calculated on either a gross or net basis.
Gross MOIC measures total value created before fees, expenses, and carried interest. It compares the gross value of the investment to total capital invested and is typically used to assess the performance of the underlying assets at the deal or portfolio level, before the impact of fund level economics.
Net MOIC measures total value delivered to investors after fees, expenses, and carried interest. It reflects the investor experience by showing how much value limited partners receive for every dollar they commit to the fund. For example, a net MOIC of 1.8x means that for every $1.00 invested, $1.80 of value has been returned or remains in the investment. While this multiple shows the total amount of value created, it does not indicate how long it took to achieve that result, which is why MOIC is typically evaluated alongside IRR.
Total Value to Paid-In (TVPI) is another way of expressing MOIC and helps explain how total value is split between realized and unrealized components:
• Distributions to Paid-In (DPI), which shows how much cash has been returned to investors relative to the dollars invested
• Residual Value to Paid-In (RVPI), which represents the remaining unrealized value of the investment relative to the dollars invested
Together, these components explain how much value has already been realized in cash and how much value remains invested.
IRR and multiples are best interpreted together. A high IRR combined with a lower multiple may indicate early realizations, while a higher multiple paired with a lower IRR may reflect value that takes longer to realize. Viewed together, these metrics provide a more complete picture of both the efficiency and the scale of value creation in a drawdown investment structure.
Evergreen and drawdown funds share a common goal of long-term value creation in private markets, but differences in fund structure shape how performance is measured, reported, and understood.
Evergreen performance is commonly measured through total return, combining NAV movement and distributions.
Drawdown performance is commonly measured through net IRR and multiples, which account for the timing and scale of cash flows over the life of the fund.
By anchoring performance interpretation to fund structure, reported metrics become easier to read, compare, and contextualize. This clarity helps translate private market results into a more intuitive understanding of how value is created and delivered over time.