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IRR

Internal rate of return: a money-weighted return measure. Sensitive to the timing of cash flows, so a single fast early exit can flatter a fund IRR for years.

IRR — Internal rate of return: a money-weighted return measure. Sensitive to the timing of cash flows, so a single fast early exit can flatter a fund IRR for years.

IRR's sensitivity to timing is its most exploitable feature — a single fast early exit can flatter a fund's IRR for years even while most capital remains invested in an uncertain outcome, which is exactly why sophisticated allocators review it alongside DPI and cash-flow detail rather than in isolation.

Frequently asked questions

What's a good IRR benchmark?

There's no universal number — it depends entirely on strategy, vintage year and market conditions, and is best judged against a relevant peer set for the same period rather than an absolute threshold.

Why does IRR differ from MOIC?

MOIC ignores timing entirely — a 2x return in two years and a 2x return in ten years have the same MOIC but very different IRRs, since IRR is specifically an annualised, time-weighted measure.

Nothing on this page is legal, tax, or investment advice. SeRuM is not a registered broker-dealer, not a placement agent, and not an investment adviser.

MOICMultiple on invested capital: total value divided by capital invested, usually measured gr DPIDistributions to paid-in capital: cash actually returned divided by capital drawn. The rea Irr moic calculatorRelated reading.

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