Term: J-curve

A term that refers to the tendency of private equity funds to show a loss in the earliest years of their lives before the drivers of returns begin to kick in and raise the value of the fund. A diagram of this early dip in value followed by a steady increase in value in subsequent years looks like the letter J. As in: Investors new to private equity need to very carefully explain the J-curve effect to their board members.

« Back to Glossary Index