IRR is a great metric to estimate the potential profitability of an investment. One can view the IRR as the annual rate of return that if used to discount a future cash flow the result would be zero. The advantage of this metric is that it makes the comparison of different kinds of investments relatively easy. In the alternative investment case it is important to look out for the different kinds of IRR such as Gross IRR, Net IRR, and whether what is presented is the IRR of the base/master fund or of the feeder fund if such exists.