How is private equity fund performance most commonly assessed?

Private equity fund performance is most commonly assessed using metrics like Internal Rate of Return (IRR) and Multiple on Invested Capital (MOIC). These metrics provide a quantitative measure of the fund's profitability and enable investors to evaluate how well a fund is generating returns relative to the capital invested.

IRR reflects the annualized rate of return that makes the net present value of cash flows from the investment equal to zero, thus helping investors understand the growth potential of their investment over time. MOIC, on the other hand, calculates the total value returned compared to the amount invested, giving a straightforward view of the fund's overall performance.

These metrics are particularly useful as they allow for performance comparison across different funds and investment strategies, illustrating the efficiency and effectiveness of the fund management.

In contrast, the other approaches mentioned do not provide a systematic or thorough evaluation of a fund's performance. Market share analysis focuses more on the competitive landscape rather than investment returns. Comparing the fund to random companies lacks a relevant benchmark since it does not account for similar investment strategies or fund structures. Solely relying on investor feedback is subjective and may not always reflect the actual financial performance of the fund, which is why using quantitative metrics is preferred for a robust assessment.