Distribution

Cash returned to investors by a fund, typically after an underlying holding is sold or produces income.

Example

A fund returning 40,000 to an investor following the sale of one portfolio company.

Important

A distribution is real money in a way a reported valuation is not, which is why a fund that has distributed little should be read differently from one reporting the same multiple in cash.

Related terms

• DPI (distributions to paid-in) — A fund multiple counting only money actually paid back to investors, divided by the capital they paid in.
• Capital call — A demand from a fund manager for part of the money an investor has committed, made at a time of the manager's choosing.
• Realised gain — The difference between what an asset actually sold for and its cost basis - a completed exchange that nothing afterwards can change.

Lessons that explain it

• The fund manufactures nothing: pass-through, minus costs — A fund's return is the weighted return of its holdings less what it charges. Knowing that changes what you are actually forecasting when you forecast a fund. (11 min)
• Run the waterfall at three exit values, and the preference type becomes obvious — A 1x non-participating preference returns the investment or the investor's share, whichever is higher. A participating preference returns the investment and then a share of the rest. The difference is largest at modest exits. (13 min)

All 578 terms in the Investing glossary