Transparent method
The formula
Worked example
Example inputs
How to interpret the result
Time-weighted return specifically strips out the effect of when money was added or withdrawn, isolating pure investment performance, which is exactly why it's the standard measure fund managers report, since a manager's actual skill shouldn't be judged by decisions the individual investor made about when to add or remove cash.
Before you rely on it
What to check
Use time-weighted return, not your own money-weighted return, when the question is specifically about how well a fund or manager performed, independent of your own contribution timing.
The common error
Where people go wrong with time-weighted return calculator
Judging a fund manager's performance using your own money-weighted return, which reflects your personal contribution timing, rather than the fund's reported time-weighted return. The two answer genuinely different questions, and conflating them can unfairly credit or blame the manager for your own timing decisions.
Sensitivity evidence
How beginning value changes the annualized return
| Beginning value | Annualized return | Total return |
|---|---|---|
| $8,000 | 14.9% | 100.0% |
| $9,000 | 12.2% | 77.8% |
| $10,000worked example | 9.9% | 60.0% |
| $11,000 | 7.8% | 45.5% |
| $12,000 | 5.9% | 33.3% |
Every input, tested
Which input moves the annualized return most
| Input | Tested from | To | Annualized return at each end | Swing |
|---|---|---|---|---|
| Ending value | $14,400 | $17,600 | 7.6% to 12.0% | 4.4% (45%) |
| Beginning value | $9,000 | $11,000 | 12.2% to 7.8% | 4.4% (45%) |
| Holding period | 4.0 years | 6.0 years | 12.5% to 8.1% | 4.3% (44%) |
Two variables at once
Annualized return by beginning value and ending value
| Beginning value \ Ending value | $12,800 | $16,000 | $19,200 |
|---|---|---|---|
| $8,000 | 9.9% | 14.9% | 19.1% |
| $9,000 | 7.3% | 12.2% | 16.4% |
| $10,000 | 5.1% | 9.9% | 13.9% |
| $11,000 | 3.1% | 7.8% | 11.8% |
| $12,000 | 1.3% | 5.9% | 9.9% |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Beginning value | $10,000 |
| Ending value | $16,000 |
| Holding period | 5.0 years |
| Annualized return | 9.9% |
| Total return | 60.0% |
Where the inputs come from
Beginning value and ending value should exclude the effect of deposits and withdrawals for a true time-weighted result, which requires chaining sub-period returns between each cash flow. This simplified page takes a beginning value, an ending value and a period, so it is exact only when no money was added or removed. If you did move money, compute each sub-period's return first and combine them.
When the result stops applying
With cash flows, the simplified inputs here will not match a proper chain-linked figure. The result does not reflect taxes, fees paid outside the fund, or the risk taken to earn it.
What to compare it with
To see the effect of your own timing, compare the result with the money-weighted return page. For the steady-rate version of the same idea, use CAGR or annualized return. When comparing funds, also check the expense ratio, since returns reported before fees look better than what you kept.
People also ask
Frequently asked questions
Why do funds report time-weighted returns?
It removes the effect of investors adding or withdrawing money, so the number reflects the manager's decisions and can be compared with a benchmark.
Can my personal return differ from the fund's?
Yes. If you bought more before a decline or sold before a rally, your money-weighted return differs from the fund's time-weighted figure.
How do I calculate it with deposits?
Split the period at each cash flow, compute each sub-period's return, and multiply the growth factors together, then annualize the total.