In this lesson
- Terms: Vintage year, Top quartile, IRR, TVPI, DPI, ILPA Performance Template
- To work through: a worked example, a 30-second film, 3 check questions
Underlined terms show their definition when you rest on them or tap them.
Funds that start in the same year invest in the same markets, so the fair comparison is with others of the same vintage year. Data providers define the vintage year in slightly different ways: the date of the first capital call from investors, the first investment, or the fund’s legal inception date, which usually comes earlier. Compare a fund with a benchmark that uses the same definition.
Within a vintage and strategy, funds are ranked into quartiles, most often by IRR: the upper quartile is the line above which the top 25% of funds sit, the lower quartile the line for the bottom 25%, with the median in the middle. A top quartile fund is one at or above the upper line.
Rankings move. Cambridge Associates’ research shows private equity funds take six to eight years on average to settle into their final quartile (venture longer), and 85% of funds ranked by IRR passed through three or four different quartiles first. A young fund’s quartile is a snapshot, not a verdict. The ranking also depends on the metric: a fund ranked by TVPI or DPI can sit in a different quartile than when ranked by IRR.
So a claim of “top quartile” comes with questions: against which benchmark, which vintage and strategy, which metric (IRR, TVPI or DPI), net or gross, and as of which date. ILPA’s Performance Template, for funds that started operating on or after January 1, 2026, aims to make the underlying figures more comparable.
Twenty funds of the same vintage, ranked by net IRR. Five sit in each quartile.
| Top 5 funds | Top quartile |
|---|---|
| Next 5 | Second quartile |
| Next 5 | Third quartile |
| Bottom 5 | Bottom quartile |
| A fund ranked 5th of 20 | Top quartile, just |
Rank the same twenty by DPI and the fifth fund could be eighth. Simple example.
Key takeaway: why it matters to investors
Almost every fundraising pitch cites a benchmark. Knowing that quartiles are set within a vintage, shift for years and depend on the metric and the data set is what lets an investor read the claim instead of taking it whole.
Watch · 30 seconds
Why a fund's birth year changes how good its returns lookA fund's vintage year is usually the year it first called capital or made its first investment. Funds are compared with others from the same vintage, because they invested in the same market conditions.
Also: You can't spend TVPI
Check yourself
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Sources
The facts in this lesson were checked against these public pages on November 10, 2026. Examples use round invented numbers. Simple examples; terms vary by fund.
- Portfolio Benchmarking: Best Practices for Private Investments (May 2018, updated December 2025), Cambridge Associates. PE, credit, real estate and natural resources funds settle into their final quartile in 6-8 years on average, venture and funds of funds 7-9; 85% of funds by IRR (87% by TVPI) ranked in three or four different quartiles first; settling differs by IRR and TVPI; two common vintage definitions (first investor cash flow, legal inception); use the benchmark provider’s definition.
- A Framework for Benchmarking (2014, updated November 2025), Cambridge Associates. Quartile rankings against peers of similar vintage and strategy, based on IRR; mPME buys index shares with capital calls and sells them in the same proportion as the fund’s distributions, avoiding a negative NAV, and compares the results as value-add.
- ILPA Performance Template, Institutional Limited Partners Association. A standard format for fund- and portfolio-level performance and cash flow data, to be used for funds commencing operations on or after January 1, 2026.
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