What should an investor verify first?

That both funds share category, vintage and strategy — otherwise their IRRs are not genuinely comparable.

Which documents matter most?

Net-of-fee performance statements and the realised-versus-unrealised breakdown for each fund.

What is the main downside to test?

A fund's higher gross IRR may rest mostly on unrealised marks rather than distributed, realised gains.

How should the final decision be made?

Build one consistent comparison table across category, net IRR, realisation status, fees and lock-in before choosing.

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How to Compare Two AIFs

Reena M1 min read

Understanding the Manager Decision

Comparing two AIFs side by side is only meaningful once strategy, vintage and category are held constant — a Category II private-credit fund from 2022 and a Category I venture fund from 2024 are not comparable on IRR alone, because they carry entirely different risk profiles and time horizons.

Reading Evidence and Attribution

With category and vintage aligned, compare on: net IRR to investors after fees (not gross fund-level IRR), realised versus unrealised proportion of that IRR, fee structure and hurdle rate, and the specific team's attribution for each fund's cited results.

Where Manager Diligence Breaks

The common mistake is comparing headline gross IRRs across funds with different fee loads, vintages and realisation status. A fund reporting a higher gross IRR built mostly on unrealised marks can be a materially worse investment than a lower-IRR fund with a majority of gains already realised and distributed.

Making the Selection Decision

Before choosing between two AIFs, build a single table: category, vintage, net-of-fee IRR, realised-versus-unrealised split, fee and hurdle structure, and lock-in terms for each. Only compare figures across that consistent table, never across summary marketing decks with different formats.

The AIF that looks better on a first glance at gross IRR is often not the better investment once fees, realisation status and vintage are actually held constant.

Factor	Fund A (example)	Fund B (example)
Category & vintage	Cat II Private Credit, 2021	Cat II Private Credit, 2021
Gross IRR reported	18%	22%
Net IRR to investor	14%	13%
Realised vs unrealised	70% realised	30% realised
Fee + hurdle	2% / 8% hurdle	2.5% / 10% hurdle

Illustrative side-by-side comparison framework for two AIFs

Key takeaways

Hold category, vintage and strategy constant before comparing any two AIFs — otherwise the comparison is meaningless.
Compare net-of-fee IRR and realised-versus-unrealised split, not headline gross IRR.
A higher gross IRR built on mostly unrealised marks can be a worse investment than a lower, mostly-realised IRR.
Build one consistent comparison table rather than reading two separate marketing decks.

More in Fund Manager Selection and Due Diligence

Continue with the other chapters in this module.

Fund Manager Selection and Due DiligenceHow to Select an AIF in IndiaSelecting an AIF in India starts with the category and strategy fit, not the brand name.Fund Manager Selection and Due DiligenceAIF Due-Diligence Checklist Before Investing ₹1 CroreA ₹1 crore AIF commitment is usually a meaningful fraction of an individual investor's liquid net worth, which justifies a structured checklist rather than an informal conversation with a relationship manager.Fund Manager Selection and Due DiligenceHow to Evaluate an AIF Fund ManagerEvaluating an AIF fund manager means assessing the people and process behind the returns, not just the returns themselves.