Unexpectedly last week, I stumbled upon an S-Curve hidden between the lines of a study released by an established private equity funds of funds firm with a cautious introductory question: “do private equity funds sometimes just run out of steam?” Continue reading
IRR is like fish, when someone gets hold of it, it slips away. Hard to seize, hard to terminate – with incredible survival instinct, it tries to jump out of any bucket where it has been secluded. Continue reading
When a standard of measurement of returns allows close to 70% of investment managers (GPs) to claim their funds are first quartile performers (i.e. ranked in the top 25%) (1) – such as the case of the IRR – something is obviously wrong. Continue reading
I could not resist tying a rhetorical figure with financial mathematics. But there is no better description for IRR quartiles – an oxymoron.
In the private capital industry jargon, quartiles are ranked sets of IRR.
But, it is a well-established notion that IRR should not be used for ranking investments!