"A lot of people think the internal rate of return is like the yield on a government bond,"
"Instead, it's a formula that rewards certain behaviors, like selling good companies or paying dividends early in a fund's history,"
"IRR is easy to "game,""
Private equity and other alternative assets are being introduced into more 401(k) plans, expanding access to a large portion of the U.S. economy that remains privately held. A small share of plan sponsors have already offered alternative assets, and executive actions may accelerate wider adoption. Roughly 90% of American companies over $100 million are privately held, making private markets a significant investment opportunity. Private market returns are often reported using internal rate of return (IRR), which differs from simple yield, can reward early exits or dividends, and can be manipulated, complicating honest performance comparisons for ordinary savers.
Read at Business Insider
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