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PE Glossary

J-Curve

J-Curve · The typical pattern of PE fund returns over time: negative in early years (due to fees and unrealized investments) followed by positive returns as portfolio companies mature and are exited.

Example

In years one to three of a new fund, LPs see negative returns as management fees and early write-downs exceed any value creation. By years five to seven, exits start producing distributions and the fund's IRR turns positive · forming the J-shape on the return chart.

Related terms

IRR (Internal Rate of Return)Vintage Year
All glossary terms

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