Weighted Rate of Return | Dollar Weighted | Definition | What is the Weighted Rate of Return?

Weighted Rate of Return

Weighted Rate of Return | Definition


The interest rate that will make the present value of the cash flows from all the subperiods in the evaluation period plus the terminal market value of the portfolio equal to the initial market value of the portfolio. Also called the internal rate of return.

The dollar-weighted rate is affected by the amount and the timing of cash flows during a given time period. This rate is an effective measure of the fund's rate of growth, giving full weight to the impact of cash flows on fund assets. The dollar-weighted rate also is referred to as the internal, discounted cash flow or the real rate of return. The term "money-weighted" is also used.


For over 1,000 additional terms and definitions please see our Investment Glossary Guide.

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