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What is the IRR and when is it used?
IRR, internal rate of return, is the average annualised rate of return generated by a fund or portfolio consisting of a single investment. It is one of the most widely used metrics for calculating the performance of a fund. However, it should always be set against investments of similar risk, with an investor requiring a higher IRR the greater the risk. A typical IRR for a private equity fund is between 10% and 15%.