PerformanceAccounting

IRR (Internal Rate of Return)

Annualized discount rate that sets the net present value of all fund cash flows to zero.

IRR is time-weighted and sensitive to the timing of capital calls and distributions. Subscription lines and early large distributions can materially affect IRR relative to multiples.

LP reporting often presents IRR alongside DPI and TVPI; each answers a different question about return and liquidity.

Related terms