DEFINITION of 'MoneyWeighted Rate Of Return'
A measure of the rate of return for an asset or portfolio of assets. It is calculated by finding the rate of return that will set the present values of all cash flows and terminal values equal to the value of the initial investment. The moneyweighted rate of return is equivalent to the internal rate of return (IRR).
INVESTOPEDIA EXPLAINS 'MoneyWeighted Rate Of Return'
There are many ways to measure returns for assets, and it is important to know which method is being used when reviewing asset performance. Moneyweighted rate of return incorporates the size and timing of cash flows, so it is an effective measure for returns on a portfolio. Another popular return calculation is the TimeWeighted Returns method.
RELATED TERMS

Net Present Value  NPV
The difference between the present value of cash inflows and ... 
Internal Rate Of Return  IRR
The discount rate often used in capital budgeting that makes ... 
Actual Return
The actual gain or loss of an investor. This can be expressed ... 
Return
The gain or loss of a security in a particular period. The return ... 
Rate Of Return
The gain or loss on an investment over a specified period, expressed ... 
Capital Expenditure (CAPEX)
Funds used by a company to acquire or upgrade physical assets ...
RELATED FAQS

Which is a better measure for capital budgeting, IRR or NPV?
In capital budgeting, there are a number of different approaches that can be used to evaluate any given project, and each ... Read Full Answer >>
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