Performance
Net vs. Gross Returns
Gross returns measure performance at the deal level before fund-level fees, expenses, and carry; net returns are what LPs actually receive.
GPs market on gross when it flatters them and net when it does not. The spread between the two - typically 400-700 basis points of IRR for buyout funds - is the cost of the fund structure.
LPs should always evaluate funds on net returns, but the gross-to-net bridge is itself diagnostic. An unusually wide spread can indicate high expenses, low fee offsets, or aggressive carry mechanics worth investigating.