PE fund waterfall (simplified) calculator
In short
Gross to LP-net, past fees, pref and carry.
Interactive: PE fund waterfall (simplified)Medium
Gross returns belong to the fund; what reaches the investor passes through fees, preferred return and carry. Follow the money:
- LP net multiple
- —
- LP net IRR (approx.)
- —
- GP take (fees + carry)
- —
- GP share of gross profit
- —
Deliberately simplified: fees on committed capital throughout, full catch-up above the pref, no recycling or deal-by-deal timing. Real waterfalls differ in detail, never in direction — run a 2.2x gross and watch what fraction of profit crosses the table.
The idea behind it
This calculator belongs to Alternatives & Private Markets, where the mechanism it computes is explained step by step, with the formula, what each input means and where the simple model stops being right. Everything is computed in your browser; nothing you type is sent anywhere.
Instruments it applies to
- Private Equity Fund — Buy whole companies with borrowed money, improve or re-lever them, sell in five years — finance's ownership business.
- Venture Capital — Portfolios of long shots: most investments die, one pays for everything — the power law as an asset class.
- Hedge Fund — Not an asset but a licence: pooled capital free to go long, short, levered and anywhere — strategies as the product.
- Infrastructure Funds — Owning the pipes, ports, towers and grids — cash flows measured in decades, contracts measured in inflation clauses.
- Open-Ended Property Fund — Daily dealing in buildings that take months to sell — the clearest liquidity mismatch anybody still sells to the public.
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- Fee drag over time — what 2-and-20 compounds into.
- Sharpe & Sortino ratio — return per unit of risk taken.
- Discount, re-rating and total return — what closing the gap is actually worth.
- The unrecoverable cost of owning vs. renting — the unrecoverable cost of each, per year.