What is the asset class with the highest target internal rate of return (IRR)?

The asset class with the highest target internal rate of return (IRR) is typically categorized as Alternatives. This category includes non-traditional investments such as private equity, real estate funds, and other types of assets that are not directly correlated with public markets.

Investors are often attracted to alternative investments because they seek higher returns to compensate for greater risks and illiquidity associated with these types of assets. The potential for higher IRR is driven by factors like unique investment strategies, market inefficiencies, and the ability to add significant value through active management and development.

In contrast, other asset classes such as Office, Logistics, and Retail typically offer more stable but lower returns. These categories are often characterized by well-established market demand and a degree of predictability in cash flows and returns. Therefore, while they provide consistent income, they typically do not match the potential high returns associated with more aggressive alternative investments. This understanding of risk and reward dynamics in different asset classes explains why alternatives are associated with the highest target internal rate of return.