Money-weighted return (MWR)

Money-weighted return (MWR), also called dollar-weighted return, measures the growth rate of a portfolio's value accounting for the actual size and timing of an investor's contributions and withdrawals, not just the performance of the underlying investments. It answers "how did this investor's money actually grow," which can differ substantially from how the investments themselves performed if the investor added or removed large sums at particular moments.

MWR is calculated as the discount rate that sets the present value of all cash flows, including the ending value, equal to zero — the same logic as an internal rate of return calculation. Because it weights each period by the amount of money invested during it, a large deposit made just before a strong period, or just before a weak one, has an outsized effect on the result. This is what distinguishes it from time-weighted return, which deliberately removes that cash-flow timing effect to isolate investment performance alone.

MWR is the more relevant figure for an individual investor asking how their own actual experience compares to their goals, since it reflects their own contribution and withdrawal decisions, good or bad. It is less useful for comparing one manager or fund to another, since two investors in the identical fund can post very different money-weighted returns purely because of when they added or withdrew cash.