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Three terms appear constantly in family-office reporting:
NAV, realized gains and unrealized gains.
They sound complicated, but they answer four relatively simple questions. It’s really important to understand these terms and to track them. MyFO helps with both.
Here's what they mean.
What Is NAV?
NAV stands for Net Asset Value.
At a basic level:
NAV = Assets − Liabilities
In an investment fund, NAV represents the value attributable to investors after the fund's liabilities are accounted for.
For a private fund investment, the GP typically reports the current value of the LP's interest periodically.
What Is an Unrealized Gain?
An unrealized gain occurs when an asset has increased in value but has not yet been sold.
Example:
Purchase price: $5M
Current estimated value: $8M
Unrealized gain: $3M
The family is wealthier on paper, but it has not received the $3 million.
In private markets, that distinction is particularly important because valuations may be based on periodic estimates rather than a continuously traded market price.
What Is a Realized Gain?
A realized gain occurs when an asset is sold for more than its cost.
Example:
Purchase price: $5M
Sale price: $8M
Realized gain: $3M
The increase has now been crystallized through a transaction.
ILPA distinguishes between realized investments that have been exited and unrealized investments that remain active.
Why the Difference Matters
Consider two portfolios:
NAV vs. Cash
NAV is not cash.
A private equity fund might report:
NAV: $20M
That does not mean the family can withdraw $20 million tomorrow.
The value may be tied up in private companies that will take years to exit.
How MyFO Helps
MyFO tracks realized and unrealized gains across both public and private investments, bringing them together as part of the family's consolidated wealth and performance reporting.
For each investment, MyFO can track:
- Cost
- Current value and NAV
- Transaction history
- Distributions
- Valuation history
- Related documents
MyFO automatically calculates realized and unrealized gains based on the investment's transaction history and changes in NAV or market value. Users can easily view these figures directly at the individual asset or investment level, or generate reports to analyze realized and unrealized gains across the portfolio on an aggregate basis.
This distinction is particularly important for family offices because an increase in the value of a private investment may increase the family's reported net worth without creating additional liquidity. Unrealized gains represent value that remains invested, while realized gains reflect value that has actually been crystallized through a sale or other disposition.
When this information is combined with cash-flow forecasting, distributions and unfunded commitments, the family office gets a much more complete picture of both investment performance and available liquidity, rather than relying on NAV alone.
In One Sentence
NAV = current net value.
Unrealized gain = value that has increased but hasn't been sold.
Realized gain = gain crystallized through a sale.
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