CCO's Guide to Calculating and Reporting IRRs

Regulators and investors alike are keenly interested in performance reporting. For private fund managers in particular, the focus has been on how varying operational and reporting practices may impact performance.

eVestment recently conducted a survey of private markets, limited partners, and consultants which revealed that 60% of respondents found it difficult to compare one fund managers performance numbers with another on a fair and consistent basis. CCOs are ultimately responsible for how performance is disclosed, yet in most instances, they are less than confident in the underlying records, inputs, and methodology used to calculate IRRs. 

Due to the recent headlines surrounding IRRs, compliance staff should develop more comprehensive knowledge of the performance presented to ensure that sufficient policies and procedures (e.g., desktop manuals), controls, disclosures, and oversight related to calculating and supporting IRR calculations are in place.

Please join ACA, and James Hendricksen, Manager Performance Measurement at USAA Real Estate Company, for a webcast discussion that will provide guidance to assist CCOs and other compliance professionals. Their discussion topics will include:

• An overview of recent headlines;
• Common pitfalls when presenting IRRs, including:
  • The impact of the use of credit facilities on overall fund returns;
  • Overview of common IRR methodologies;
  • Building and calculating a custom track record; 
  • Using fund models which include projections for future cash flows;
  • Firm inception track records; and
  • Asset-level performance considerations;
• Controls to mitigate risk in the generation and dissemination of investment performance:
  • Recommended disclosure in regards to performance streams; 
  • Desktop policies to ensure consistency of process; and
  • The adequacy of books and records that support marketed performance.