Returns

IRR

Also known as: internal rate of return

status: draft

Internal rate of return. The discount rate at which the net present value of all cash flows equals zero. Used to compare investment returns across different timing profiles.

What to watch

IRR is sensitive to timing. A 15% IRR over 6 months looks different from 15% over 3 years. Always pair IRR with cash-on-cash multiple and payback period. For short-duration assets, IRR can look inflated compared to longer deals with similar absolute returns.

Referenced in 45 topics

ABF vs. traditional lending (when ABF makes sense, when it doesn't) foundations Back leverage and fund financing playbooks Broadly syndicated loan CLOs asset-classes Building your ABF pitch playbooks Cash flow modeling accounting-valuation Collateralized loan obligations (CLOs) structures CRE CLOs asset-classes Credit funds and private capital capital-sources Credit-linked notes / synthetic securitizations structures Development finance institutions capital-sources Diligence guide asset-classes Distressed market playbook market-landscape Evaluating a credit fund's ABF strategy playbooks Evaluating portfolio quality and performance playbooks Family offices as ABF capital providers playbooks Fund investor reporting for ABF operations-lifecycle Law firm finance asset-classes Litigation finance asset-classes Middle market CLOs asset-classes Music royalties and content IP asset-classes NAV and liquidity considerations accounting-valuation NAV facilities and subscription lines structures Non-performing loans (NPL) asset-classes Pharma royalties asset-classes Portfolio financing asset-classes Portfolio monitoring for ABF funds operations-lifecycle Portfolio valuation accounting-valuation Pricing and relative value accounting-valuation Private placement / bespoke structures structures Red flags asset-classes Secondaries and liquidity asset-classes Shipping and maritime finance asset-classes Significant risk transfer (SRT) structures Single-case funding asset-classes Sourcing capital for ABF funds playbooks Subscription finance / capital call lines structures Tax liens asset-classes Term securitization (ABS/MBS) structures The ABF ecosystem (players, roles, and how they interact) foundations Timeshare receivables asset-classes Top capital provider mistakes playbooks Track record presentation playbooks Understanding ABF LPs playbooks Understanding back leverage (LP perspective) playbooks Valuation approaches asset-classes