Family office reporting: NAV, IRR, TVPI and look-through explained

A family office report has one job: to let the people who own the wealth understand it well enough to make decisions. Most reports fail that test not because the numbers are wrong but because nobody can say precisely what they mean - which NAV, whose IRR, as of which date, in what currency. This guide sets out the measures, the traps and a structure that works.

The four questions every report answers

1. What do we have? Net worth, and how it is composed: private funds, listed securities, property and other real assets, cash. By entity, by member, by asset class, by currency.
2. How has it done? Performance since inception and over the period: multiples and money-weighted returns for the illiquid book, time-weighted returns for the listed book, against a benchmark where one is meaningful.
3. What is coming? Unfunded commitments, expected calls and distributions, the family's spending, and the cash available to meet them - the liquidity view.
4. What changed, and what needs a decision? The narrative: movements since the last report, valuations received, documents outstanding, items awaiting approval.

Everything else - fees, transparency scores, tax positions, ESG - is detail behind one of those four.

The measures, precisely

Net asset value (NAV)

For a private fund, NAV is the family's capital account balance as reported on the latest capital account statement - never the fund's own NAV, and never a notice. Two traps:

• A statement covers a period. Calls paid and distributions received after the statement date are real cash movements the statement does not know about. A careful report rolls the statement forward at cost for those flows and says so.
• Multi-class funds report one balance per share class. The family's position is the sum; a report that picks one class understates it.

For listed securities, NAV is units multiplied by the closing price, with a bond's price per 100 applied to nominal. For property and other real assets, it is the latest valuation on file, with its date shown.

Paid-in, distributions and the multiples

• Paid-in (contributions) - every capital call actually paid, including fees and equalisation interest drawn with it. For a listed holding, cost of purchases.
• Distributions - every cash distribution received; for a listed holding, sale proceeds plus income.
• TVPI = (distributions + NAV) / paid-in. Total value to paid-in: the headline multiple.
• DPI = distributions / paid-in. What has come back in cash.
• RVPI = NAV / paid-in. What is still at risk.

TVPI is unambiguous only once you fix the currency and the date at which each flow is converted - see below.

IRR

The internal rate of return is the annualised rate that discounts every dated cash flow, plus the current NAV as a final inflow, to zero. It is money-weighted: it rewards good timing as well as good picking, which is what an investor in illiquid funds experiences.

Three things about IRR that reports rarely state:

• It is unstable early. A fund six months old with one distribution can show an IRR of 300 %. Sensible reports withhold IRR until at least a year of history exists.
• It can have no solution, or several. Sign changes in the flows can defeat the usual Newton solver from a single starting guess. A robust engine tries a ladder of starting points and brackets the root; if a fund shows "no IRR" it is worth asking why.
• A pooled IRR is not an average. The portfolio IRR is computed on the pooled flows of every holding as if they were one investment. It will differ from the mean of the holdings' IRRs, and it should.

Currency

A family reporting in sterling with dollar funds has two defensible bases:

• Lifetime totals at today's rate - convert paid-in, distributions and NAV at the reporting-date rate. Simple; but it pretends every call was paid at today's rate.
• Flows at their own dates - convert each call and distribution at the rate on the day it happened, and NAV at the reporting date. This is the family's actual experience in its reporting currency, and it is the only basis on which an IRR in that currency is meaningful.

The two give different TVPIs for the same fund. Choose the second, label it ("in GBP, flows at their own dates") and use it everywhere.

As-of date

Every figure should be reproducible as it stood on a given date. That means the report engine reads only documents and transactions dated on or before the as-of date, uses the latest statement on file as at that date, and applies the FX rates of that date. A report that cannot be re-run for last quarter cannot be compared with this one.

Look-through

"Look-through" means seeing past the wrapper to what is inside. Two kinds matter:

Ownership look-through - a family member owns 60 % of a holding company that owns 100 % of a partnership that holds a fund; her share of that fund is 60 %. A report by member follows those percentages through every layer. Shares that reach nobody (a trust with no economic owner recorded, say) should be reported as unallocated, never split arbitrarily.

Portfolio look-through - the GP's quarterly report says the fund is 40 % North America, 35 % Europe, 25 % Asia, and names its top holdings. Applied to the family's NAV in that fund, this gives geography and sector exposure across the whole book - and, for a listed fund or ETF, the published composition does the same job.

Both depend on data the family has to collect: an ownership register kept up to date, and GP reports actually read rather than filed.

Benchmarks that mean something

Comparing a private-equity IRR to a public index return is a category error; the flows are different shapes. The standard remedies:

• Kaplan-Schoar PME - invest each call in the index and sell each distribution from it; the ratio of (index value of distributions + NAV) to index value of calls. Above 1.0 means the fund beat the index on the same flows.
• Direct alpha - the annualised excess return implied by the same exercise.

Assign each holding a benchmark (MSCI World plus a premium for buy-out, NASDAQ plus a premium for venture, SONIA plus a spread for credit and hedge funds) and report both. Where the benchmark's history starts after the fund's first flow, say "since" and the date.

A report structure that works

For a quarterly family report, in this order:

1. In brief - four numbers (net worth, change, IRR, cash), three sentences on what changed, three items needing attention.
2. Net worth - composition, movement since last quarter, by entity and by member.
3. Performance - portfolio multiples and pooled IRR, top and bottom movers, PME.
4. Liquidity - cash by account and currency, unfunded, the 12-month forecast, runway in months of spending.
5. Activity - calls paid, distributions received, purchases and sales, valuations received, documents outstanding.
6. Basis of preparation - as-of date, reporting currency and FX basis, valuation sources by asset class, what was estimated.

Every sentence in the narrative should be traceable to a figure in the tables, and every figure to a document. A report that can be challenged line by line is a report the family will trust.

What Tributom One does

The Reporting Centre computes NAV, multiples and IRR once, in the database, from the same register that holds the documents and the ledger; every page and every Report Studio pack reads that one calculation. The viewing currency and as-of date are header controls; flows convert at their own dates; the IRR solver brackets its root; ownership look-through follows the family's register and reports the unowned share as unallocated; and benchmarks give KS-PME and direct alpha per holding and for the book. The linked pages show each of these on screen.