What is the 'TimeWeighted Rate of Return'
The timeweighted rate of return is a measure of the compound rate of growth in a portfolio. Because this method eliminates the distorting effects created by inflows of new money, it is used to compare the returns of investment managers.
This is also called the "geometric mean return," as the reinvestment is captured by using the geometric total and mean, rather than the arithmetic total and mean.
BREAKING DOWN 'TimeWeighted Rate of Return'
It is assumed that all cash distributions are reinvested in the portfolio and the exact same periods are used for comparisons. When calculating timeweighted rate of return, the effect of varying cash inflows is eliminated by assuming a single investment at the beginning of a period and measuring the growth or loss of market value to the end of that period.

Annual Return
The return an investment provides over a period of time, expressed ... 
Geometric Mean
The average of a set of products, the calculation of which is ... 
Mean
The simple mathematical average of a set of two or more numbers. ... 
Unweighted Index
A simple arithmetic or geometric average used to calculate stock ... 
Annualized Total Return
The average amount of money earned by an investment each year ... 
Portfolio Return
The monetary return experienced by a holder of a portfolio. Portfolio ...

Professionals
Measures of Investment Return
Measures of Investment Return 
Investing
TimeWeighted Rate of Return
Timeweighted rate of return measures the performance of an investment portfolio by taking a single investment and measuring its growth or loss at the end of a time period. 
Investing Basics
Breaking Down The Geometric Mean
Understanding portfolio performance, whether for a selfmanaged, discretionary portfolio or a nondiscretionary portfolio, is vital to determining whether the portfolio strategy is working or ... 
Fundamental Analysis
Explaining the Geometric Mean
The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment or portfolio. 
Professionals
Money Vs. TimeWeighted Return
CFA Level 1  Discounted Cash Flow Applications  Money Vs. TimeWeighted Return 
Fundamental Analysis
The Most Accurate Way To Gauge Returns: The Compound Annual Growth Rate
The compound annual growth rate, or CAGR for short, represents one of the most accurate ways to calculate and determine returns for individual assets, investment portfolios and anything that ... 
Fundamental Analysis
Gauge Portfolio Performance By Measuring Returns
Calculate returns frequently and accurately to ensure that you're meeting your investing goals. 
Professionals
Introduction
FINRA/NASAA Series 66: Section 2 Measuring Portfolio Returns. This section discusses different return measures: return on investment, holding period, annualized, risk free and total returns. 
Fundamental Analysis
How To Calculate Your Investment Return
How much are your investments actually returning? Find out why the method of calculation matters. 
Economics
Calculating the Arithmetic Mean
The arithmetic mean is the average of a sum of numbers.

How can investors benefit by understanding geometric means?
Discover why investors should know the difference between geometric and arithmetic means, and why the geometric mean is more ... Read Answer >> 
What is a geometric mean in statistics?
Learn what the geometric mean is in statistics and how it is used to calculate various growth rates and returns by financial ... Read Answer >> 
Can two numbers have the same arithmetic and geometric means?
Learn about the often complicated relationship between the geometric mean and arithmetic mean for a set of numbers, and which ... Read Answer >> 
What are some examples of applications of the geometric mean?
Learn about applications of the geometric mean based on examples such as calculations of portfolio return, growth rates and ... Read Answer >> 
How do you calculate the geometric mean to assess portfolio performance?
Learn how to calculate the geometric mean. Understand when the geometric mean should be used and how it differs from the ... Read Answer >> 
The ABC Global mutual fund exhibited the following rates of return over the last ...
The correct answer is: a) Arithmetic Mean = (15 + 7 + 6.5 + 11.3 + 32.7)/5 = 7.18% Geometric Mean =[(1.15 x 0.93 x 1.065 ... Read Answer >>