{"id":1817,"date":"2024-02-02T16:51:52","date_gmt":"2024-02-03T00:51:52","guid":{"rendered":"https:\/\/achuweb.com\/Gemini\/?p=1817"},"modified":"2024-02-03T21:26:52","modified_gmt":"2024-02-04T05:26:52","slug":"how-different-funds-approach-hurdle-rate-calculations","status":"publish","type":"post","link":"https:\/\/achuweb.com\/Gemini\/2024\/02\/02\/how-different-funds-approach-hurdle-rate-calculations\/","title":{"rendered":"How Different Funds Approach Hurdle Rate Calculations"},"content":{"rendered":"<p>[et_pb_section fb_built=&#8221;1&#8243; theme_builder_area=&#8221;post_content&#8221; _builder_version=&#8221;4.24.0&#8243; _module_preset=&#8221;default&#8221;][et_pb_row _builder_version=&#8221;4.24.0&#8243; _module_preset=&#8221;default&#8221; theme_builder_area=&#8221;post_content&#8221;][et_pb_column _builder_version=&#8221;4.24.0&#8243; _module_preset=&#8221;default&#8221; type=&#8221;4_4&#8243; theme_builder_area=&#8221;post_content&#8221;][et_pb_text _builder_version=&#8221;4.24.0&#8243; _module_preset=&#8221;default&#8221; theme_builder_area=&#8221;post_content&#8221; hover_enabled=&#8221;0&#8243; sticky_enabled=&#8221;0&#8243;]<\/p>\n<p>In a recent<span>\u00a0<\/span><a href=\"https:\/\/www.goodwinlaw.com\/en\/insights\/publications\/2023\/11\/insights-otherindustries-pif-half-of-private-investment-funds-set-hurdle-rates\">piece<\/a>\u00a0in this series, our colleagues showed that funds set hurdle rates differently depending on the asset class. Funds also use different approaches for calculating hurdle rates.<\/p>\n<p>Funds typically use one of three main approaches to calculate the hurdle: compounding interest rate, internal rate of return (IRR), or percent of amounts drawn or committed.<\/p>\n<p>When all funds are considered together, the compounding interest rate approach is the most popular. An analysis of Goodwin\u2019s Private Funds Terms Database shows that 50% of funds overall use this approach, while 38% use IRR, and 12% use percent of amounts drawn or committed.<\/p>\n<p>[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A look at how funds across asset classes \u2013 including private equity, real estate, infrastructure, venture capital, and debt \u2013 calculate hurdle rates.<\/p>\n","protected":false},"author":1,"featured_media":1798,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[53],"tags":[],"class_list":["post-1817","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insights"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - 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