Is this article a fair dissection of PE returns? If the IRRs are what they are, how else should we look at the returns??
https://amp.ft.com/content/33ec23c0-fe95-44ec-a173-bd2fb9b66e63
This link seems to say that the IRR isn’t a valid metric but if Apollo returned an average of 39% a year, why is it invalid to use that as their gross IRR?
Buffett and Marks have both criticized the use of IRR as a performance measure. Editor's Letter: Warren Buffett questions legitimacy of PE's use of IRR | Buyouts (buyoutsinsider.com).
There are other measures such as TVPI, DPI, public market comparables (PME) and quartile benchmarks that LPs use as the IRR number by itself can be gamed.
For the long established mega funds (such as KKR and Apollo), it can help to look at returns of recent funds (say last 10-15 years) to a) not have the IRR formula weighted by the really solid returns those funds were able to generate early in their history and b) to get an indication of returns for more recent fund sizes/strategies.
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