An AIF’s performance is gauged by two main metrics: **MOIC** (Multiple on Invested Capital) and **IRR** (Internal Rate of Return). Both are essential, but they tell different stories.
- MOIC (e.g., 2.5x): Tells you the magnitude of the profit (how many times your money multiplied). It is a measure of total *value creation*.
- IRR (e.g., 20%): Tells you the speed of the profit (the annualized return). It is a measure of *time efficiency*.
A high MOIC on a long-duration fund might have a lower IRR than a slightly lower MOIC realized quickly. The ideal AIF delivers strong performance on both metrics.
