Summary

The rise in private market investments is largely due to a belief in their superior returns, driven by the use of internal rate of return (IRR) as a key performance metric. Many investors mistakenly interpret IRR as a rate of return, leading to inflated expectations about private capital funds. It’s important for investors to understand that IRR does not equate to actual returns, especially for illiquid assets with complex cash flows.

Highlights & Notes

Curated annotations from Readwise.