Time-weighted return
Time-weighted return measures the quality of the investment, independent of when money was paid in. Money-weighted return measures instead what your actually deployed capital earned. Both are correct and answer different questions.
- Money-weighted much weaker
- Large amounts arrived before weak phases. The path was better than what your capital achieved. A typical pattern after a lump sum shortly before a correction.
- Slightly unlucky timing
- Contributions landed a little unfavourably, but the gap stays small. With regular savings plans this is the normal case.
- Slightly lucky timing
- Part of the money arrived before good phases. Usually chance rather than skill.
- Money-weighted much stronger
- Larger amounts met good phases. Check whether that came from a deliberate decision or simply from when money happened to be available.
How it is calculated
TWR = Π ( 1 + r[sub-period] ) − 1, sub-periods split at every cash flow
A portfolio starts with 10,000 € and gains 20 % in the first half year. You then add 50,000 €, and in the second half the portfolio loses 10 %. The path was good; your capital still lost.
- First half
- +20 %
- Second half
- −10 %
- Time-weighted
- +8.0 %
- Money-weighted
- −6.4 %
What the number does not tell you
- Time-weighted return is not your profit. It describes the path, not the outcome in euros. Someone starting with 1,000 € and adding large sums only late has a high TWR and still earned little.
- Money-weighted return grades your timing too. That makes it unfit for comparing two portfolios or strategies: half of what it measures is when money happened to be available, which has nothing to do with the investment.
- Modified Dietz is an approximation. Without daily valuations, this method weights each cash flow by how long it sat in the period. With several large flows close together, the result drifts from the exact calculation.
- Brokers use different methods. Without knowing which return is shown, two figures from two sources are not comparable. The gap often runs into double-digit percentages.
Related metrics
How Evergrova calculates it
Performance & Risk shows the time-weighted return so periods and strategies stay comparable. In backtesting, end value and contributed capital sit alongside it, keeping the actual money path visible.
Data basis: time-weighted total return across the whole window, independent of when contributions were made.
View the demo portfolioCommon questions
Which return should I use?
For "was my investment good", the time-weighted one, since it removes contribution timing. For "what did my money earn", the money-weighted one. For comparison against an index, always the time-weighted figure.
Why does my broker show a completely different number?
Because most brokers calculate money-weighted returns and additionally treat fees, taxes and foreign currency differently. Check which method is used before putting the difference down to an error.
What is Modified Dietz?
An approximation of the money-weighted return that weights each cash flow by how long it worked within the period. It needs no daily valuations and is standard in fund reporting.
Last reviewed: 2026-08-08