By Christopher M. Schelling, CAIA®, Director of Alternatives, Venturi Private Wealth. An investor’s defense of a maligned metric. Dear IRR,:
It seems like every time I see the letters ‘IRR’ in an investment article or financial news site, the story is about how terrible you are. Internal rates of return are misleading, inaccurate, and untrustworthy. You are not directly comparable to a compound rate of rate of return, and you don’t represent what investors actually earn. I may be guilty of some of the same criticism as well.