Critical Formula: Money-Weighted Rate of Return (MWRR)

CFA Level I Glossary

The money-weighted rate of return is the internal rate of return that equates the present value of cash inflows to the present value of cash outflows for an investment account. Large external contributions or withdrawals heavily influence the result. It measures the investor’s personal dollar experience. Confusing it with time-weighted return, which isolates portfolio growth from cash-flow timing, is the standard mix-up.

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