1 Time Weighted Rate of Return is a method of
computing the returns of a portfolio.2 It eliminates the distorting effects created by inflow and outflow of money caused by interim investments and redemptions.
3 To compute TWRR for any period, calculate the returns for every sub-period before any contribution or withdrawal occur and then geometrically link these sub-period returns together to compute the return over the period.
4 It is used to compare the returns of managed portfolios like mutual funds where there is no control on cash flows and to compare investment managers' performance.
5 It requires daily portfolio valuations whenever any contribution or withdrawal occurs, hence not used to compute returns at individual level.
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