Reading Time: 4 min

Analyzing fund level returns is a standard step when analyzing alternative investment strategies and track records. In reality, net returns at the fund level can be distorted – either in positive or negative directions by fund accounting. This comprises cash flow movement and timing including capital calls and distributions to LPs, cash account balance and also fund credit facilities.

Private markets fund returns are in fact generated from the underlying deals or portfolio companies within the funds, so it is critical to examine deal level returns that are based on the actual gross cash flows moving between the funds and deals.

In the previous two blog articles on Asia, we concluded that Asia funds do show attractive net IRRs, but cash-on-cash net DPI returns to LPs do not show the same developments when compared against North America focused funds.

But is the picture any different when we go deeper to the deal level?

Comparing Deal Gross IRR and TVPI

Referring to Figure 1, where Market Data is Asia (shown in solid blue) and the Benchmark is North America (shown in stripes), median Asia returns outperform in 2005 and 2006. From 2007 through 2011, North America is superior by a wide margin. However, in the more recent years from 2012 to 2016, Asia and North America deals are quite comparable and within +/- 3 % -points.

The disparity increases dramatically in 2017 and 2018 with North America having a significant advantage, but deals from these years are still very new.

Benchmark Performance Attribution- IRR

Figure 1

Figure 2 shows deal gross TVPI returns and while the observations are similar, with Asia outperforming in 2005 and 2006, and North America having the edge from 2007 through 2011, the differences aren’t as dramatic when measured by TVPI as it is by IRR.

Benchmark Performance Attribution - TVPI

Figure 2

During the financial crisis, specifically the period from 2007 and 2011, North America actually outperforms Asia despite the crisis originating in the US. Looking at the more recent years from 2012 to 2016, the two regions are now relatively comparable.

There is no distinct outperformance or underperformance from either North America or Asia.

Since the CEPRES Platform aggregates primary-sourced cash flow based data, we can flexibly customize further analysis such as isolating fully realized deals from the dataset to eliminate the effects of unrealized valuations.

We can also compare return spread within each investment year with a side-by-side comparison of the upper and lower quartiles.

If you would like to know more, please contact your Account Manager or write to us on

Want to try out an analysis yourself? Register today – it’s free!

Simon Tang, CEPRES
Simon Tang

Partner, CEPRES

Linkedin Profile