Performance
J-Curve
The early-life pattern in which a private fund's returns dip below zero as fees and write-downs precede gains.
Most funds show negative IRR for the first two to four years as management fees are paid and early write-downs occur, before exits push performance positive. Sub lines have flattened the J-curve in many funds.
LPs should not over-react to early IRR weakness in young funds. The relevant questions are deployment pace, portfolio quality, and adherence to strategy.