medium · Private Credit & Debt fund-structures-returns-economics
A fund manager reports a Public Market Equivalent (PME) of $1.15 using the S&P 500 as a benchmark.
Which of the following is the most accurate interpretation of this metric for an institutional LP?
- The fund outperformed the public index by 15% on a risk-adjusted cash-flow basis
- The GP is entitled to an additional 15% catch-up because they beat the public benchmark
- The fund's TVPI multiple is $1.15 ×, whereas the index is $1.0 ×
- The fund's IRR is exactly 15% higher than the S&P 500's annual return
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