This phenomenon is called the j-curve. Its not that the IRR needs to be sky-high, rather that the fair value of the fund's aggregate investments need to appreci

This phenomenon is called the j-curve. Its not that the IRR needs to be sky-high, rather that the fair value of the fund's aggregate investments need to appreciate above the cumulative amount of fees drawn before the IRR can be positive. http://en.wikipedia.org/wiki/J_curve#Private_equity http://en.wikipedia.org/wiki/J_curve#Private_equity