Which ratio indicates how much of a private equity fund's return is unrealized?

The ratio that indicates how much of a private equity fund's return is unrealized is the Residual Value to Paid-In (RVPI) ratio. This metric measures the value of the unrealized investments in the fund compared to the total capital that investors have contributed (paid in).

Essentially, RVPI provides insight into the portion of returns that have not yet been realized through exits or sales of those investments. A higher RVPI indicates that a larger proportion of the fund's value is still tied up in investments that have not been cashed out, suggesting the potential for future gains as those investments are eventually sold.

Other ratios, such as Internal Rate of Return (IRR) and Multiple of Money (MoM), focus more on the total returns including both realized and unrealized performance and do not specifically distinguish the unrealized portion. The Paid-In Capital (PIC) ratio relates to the contributions made by investors but does not directly measure unrealized returns. Therefore, RVPI is specifically designed to highlight the unrealized gains within a private equity fund, making it the correct choice in this context.