Time-weighted Rate of Return | Definition | What is it?

Time-Weighted Rate of Return

Time-weighted Rate of Return | Definition

A method of computing rates of return based on the investment performance of a unit of assets held continuously for the entire time period measured. This rate provides an effective standard for comparing the performance of different funds, in which cash flow could vary considerably. The money manager usually cannot control the timing or the amount of contributions to the fund. Because the time-weighted rate reduces the impact of money flows into or out of the fund, it is often considered a fairer means of appraising the fund manager's ability to make the fund assets perform than the dollar-weighted rate of return.

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Tags: Time-weighted Rate of Return, Time-weighted Rate of Returns, rate of returns, time weighted returns, time weighted return, rate of return