DEFINITION of 'Pooled Internal Rate Of Return - PIRR'

Pooled internal rate of return (PIRR) is a method of calculating the overall internal rate of return (IRR) of a portfolio of several projects by combining their individual cash flows. In order to calculate this, you need to know not only the cash flows received but also the timing of those cash flows. The overall internal rate of return of the portfolio can be calculated from this pooled cash flow.

BREAKING DOWN 'Pooled Internal Rate Of Return - PIRR'

The pooled internal rate of return (PIRR) can be used to find the overall rate of return for an entity running multiple projects or for a portfolio of funds each producing their own rate of return. The pooled IRR concept can be applied, for example, in the case of a private equity group that has several funds. The pooled IRR can establish the overall IRR for the private equity group, and is better suited for this purpose than say average IRR of the funds, which may not give an accurate picture of overall performance.

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