One of my favourite quotations is Peter Drucker’s:
If you can’t measure it, you can’t manage it.
The obsolete and inadequate dollar-weighted performance measures that are the current standards cannot cope with the evolving requirements of private capital industry stakeholders, that have become more sophisticated and increasingly require better dynamic allocation, liquidity and risk management solutions.
The issues with IRR and cash-on-cash measures are well-known. And yet, such performance standards have not been changed and the proposed alternatives do not address their flaws in a practical, realistic and replicable way. Which is instead the objective of the DaRC approach.