👋 Welcome to the 22 new readers and welcome back to everyone else - and thanks for all the feedback I received after last weeks post - please keep it coming!
Last week, I shared my overall framework for evaluating GPs.
This week, I want to zoom in on the one chart I always open first when looking at a fund. It’s simple, but it gives a surprisingly complete picture of a fund’s return profile - in one glance you can see distribution, concentration, and how much is still unrealized.
Here’s what we’ll cover today:
Why I create this chart when I start getting serious about a fund
The mechanics behind the chart
A simple, but non-trivial example
How this chart should look across asset classes
And most importantly: Typical flags and questions this chart raises
As always, I’ll wrap up with a few of my favorite reads this week + new funds raised in the last 7 days.
Let’s dive in 👇
The one chart I open first
If I’m seriously considering a fund, this is the chart I pull up before anything else. In one view it shows how returns are distributed and how diversified the portfolio really is - two things I care about more than headline IRR.
It’s the quickest gut-check against concentration and outliers: look at distribution and avoid dependency on a single winner.
How the chart works
Y-axis: total value created, split into realized and unrealized. You instantly see the spread of outcomes and how much of it is locked in.
X-axis: portfolio companies, where the width of each bar = capital invested in that company.
Net effect: height shows outcome, width shows bet size. Put together, you see if big bets paid off, if small bets drove the fund, and how much is still paper gains.Add a few overlay metrics
Add two simple data points on top of the chart:
Top 5 investments as % of total returns - Shows return concentration
Top 5 investments as % of total capital deployed - Shows capital concentration
These two numbers tell you instantly whether you're looking at consistent execution or a portfolio carried by one or two home runs.
Adding these numbers consistently across funds and managers also gives quick numbers to benchmark against.A simple thought experiment
Two GPs, each on Fund II with 10 investments in Fund I: