irr question

Factual Questions
1

I am working with performances called Internal Rate of Return aka irr.

I have a portfolio with a irr.
The formula for this irr is

irr = ((emv-bmv-netcontwith) / (acb))*100

irr = internal rate of return
emv= ending marketvalue
bmv= beginning marketvalue
netcontwith= net contribution and withdrawal
acb= average capital base (bmv+sum of each contribution or withdrawal in the following formula: (contribution*(days left/days total in period)…
In this portfolio, I have a irr for the total portfolio:
total irr = -0.0985703
total bmv = 21,866,388.23
total emv = 21,844,484.50
total netcontwith = -350.00

I also have figures for each asset class:
cash: bmv = 6,467,538.37emv = 6,473,375.37netcontwith = 5,837.00acb = ? irr = ?
equities: bmv = 6,770,590.00emv = 6,728,976.00netcontwith = -2,687.00acb = ? irr = ?
fixed-income: bmv = 7,104,066.86emv = 7,153,438.13netcontwith = 0.00acb = ? irr = ?
foreign: bmv = 1,524,193.00emv = 1,488,695.00netcontwith = -3,500.00acb = ? irr = ?

So with the above information, can we calculate the irr for these asset classes?
all the figures are for the same period.
okay here is what i can figure out:
cash bmv + equities bmv + fixed-income bmv + foreign bmv = total bmv
and same goes with emv and netcontwith.
But irr, I dunno what the relationships are between the asset classes and the total.
Anyone shed any light on this?

Thanks.

2

To get an internal rate of return (IRR), you must have at least 1 inflow and 1 outflow. So for your cash and fixed income examples, not enough information is given to generate an IRR. Instead of net contribution, you’d have to break it down by contributions and distributions. And by using net contributions, you’re ignoring the timings, which defeats the purpose of IRR.

3

i dun get the point about IRR needing at least 1 inflow and 1 outflow.
you can have IRR with no flows. it be equivalent to simple rate of return but those if it is stated as IRR, you will know that there were no flows or negligible flows.

as for not enough information, you do have total IRR.
so the key question is that is there a relation to total IRR to the asset class IRR?

i do know that if i have the asset class irr and everything for total irr, but don’t have the acb and also don’t have one of the following: bmv, emv, or netcontwith for the asset class, I can calculate the missing acb and whatever one other thing that I was missing.

so i jumped to a conclusion that total irr is somewhat related to asset class irr, am i wrong?

4

Man, what kind of godawful certification exam are you taking?

I’m pretty sure you don’t have enough information, because there is more than one combination of ACB and IRR for each asset class that will sum up properly to give you the total portfolio ACB and IRR.

5

Thanks you two.

I guess even if you know the netcontwith, there are still more than one possible combination to get the total IRR, then it is impossible.

now, can someone come up with an example?

cuz i can’t figure out how to get an example where everything is the same except for when the flows occur and still come up with same irr.

this is not a certification. this is what i do to pass my time at work. work on formulas. haha i think this will be helpful in the future.

6

nevermind, i got it.
thanks.