Data sourced from Dakota Private Markets, the private fund performance platform powered by Dakota. Learn More | Request Access
Median Net IRR runs from the high single digits in private credit to the high teens in venture capital, and that is before vintage year or strategy enters the picture. A fund that quotes one return figure without that context leaves the allocator to supply the benchmark. The rest of this post covers what that benchmark should be.
Vintage sets the baseline
Net IRR reflects the market a fund entered. A 2009 vintage bought into depressed valuations and had a decade of recovery to work with. A 2021 vintage deployed at peak pricing, and a fund that young still carries unrealized marks, so much of its reported IRR is the manager’s opinion rather than cash returned. This is why allocators compare funds only within a single vintage year, and why a fund’s DPI matters more the younger it is.
Asset class moves the median and the range
Median Net IRR differs by asset class, and so does the width of the range around it. Across vintages, Dakota Private Markets shows the following:
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Asset Class
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Median Net IRR Range Across Vintages
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Private Equity
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Low to mid teens
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Venture Capital
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Low to high teens
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Private Credit
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High single digits to low teens
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Real Estate
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Mid single digits to mid teens
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Source: Dakota Private Markets.
Venture sits highest, which reflects the return profile investors expect for taking early-stage risk. Private credit sits lowest at the floor, in line with a contractual, income-driven return. Private equity holds a tighter band than either venture or real estate. Real estate shows the widest spread of the four, which is what you would expect from a category that mixes core stabilized assets with opportunistic development.
Sub-asset class adds more variance
The ranges above are broad because each asset class is a bundle of strategies with different risk, leverage, and return sources. Variance widens again once you cut to the sub-asset class. Buyout and growth equity can sit in very different parts of the private equity range. Direct lending and distressed credit have different return drivers and different loss profiles. Core, value-add, and opportunistic real estate are separate risk categories that happen to share a label.
This matters because a manager ranked against the full asset class can look better or worse than they would against the strategy they actually run. Allocators know this, which is why a broad benchmark gets challenged quickly.
What allocators check before accepting a benchmark
Before a Net IRR figure counts for anything in a diligence discussion, three things have to line up:
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Vintage match. Is the comparison set the same vintage year, or a neighboring one?
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Asset class match. Is the fund ranked against the right broad universe?
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Sub-strategy match. Is it ranked against funds that take the same kind of risk?
A Net IRR without a peer group is a rumor. For a fundraiser, the stronger pitch leads with quartile rank in a matched peer group, and shows the cohort behind it, rather than quoting a headline return and waiting to be asked.
Bottom line
Net IRR is a rank, not a number. “Good” means top quartile within the right vintage, asset class, and sub-asset class, and a fund that clears all three filters tells a different story than one that only clears the broadest.
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