Money weighted vs time weighted return

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Money Weighted Versus Time Weighted Rates of Return
The main difference between them is that the time-weighted return (TWR) eliminates the effect of cash flows in and out of the portfolio, whereas the money-. Unlike a time-weighted methodology, which removes the impact of cash flows when calculating your rate of return, money-weighted rates of return calculate investment performance taking account both the size and timing of cash flows in and out of an investment portfolio, placing a greater weight on periods when the. A money-weighted rate of return is the rate of return that will set the present values of all cash flows equal to the value of the initial investment.