Time-Weighted Return Calculator
When money flows into or out of a portfolio, a simple start-to-finish return mixes manager skill with the luck of cash flow timing. Time-weighted return solves this by splitting the period at each cash flow, measuring each sub-period's return, and geometrically linking them. The result reflects the growth of a single unit of money left invested throughout, which is why it is the standard for comparing investment managers. Enter each sub-period return below and the calculator chains them into the cumulative time-weighted return.
Time-weighted return formula
Growth factor = (1 + r1) * (1 + r2) * ... * (1 + rn)
Time-weighted return = growth factor - 1
Each ri is one sub-period return as a decimal
Each sub-period runs between consecutive cash flows. The growth factor is the cumulative product of the (1 + return) terms; subtracting one converts it back to a percentage return.
Using time-weighted return
- TWR removes the effect of deposit and withdrawal timing on measured performance.
- It is the industry standard for reporting and comparing fund manager returns.
- Sub-period returns are linked by multiplication because returns compound.
- Break the period at every cash flow for an accurate result.
- For investor experience that depends on cash flow timing, use money-weighted return instead.
Time-weighted return: frequently asked questions
What is time-weighted return?
Time-weighted return (TWR) measures the compound growth of one unit of currency in a portfolio, independent of when money was deposited or withdrawn. It breaks the period into sub-periods at each cash flow, computes each sub-period return, then geometrically links them. It isolates the performance of the investment manager from the timing of investor cash flows.
What is the time-weighted return formula?
TWR = (1 + r1) * (1 + r2) * ... * (1 + rn) - 1, where each ri is the return of one sub-period between cash flows. Each sub-period return is the ending value before the next cash flow divided by the starting value just after the previous cash flow, minus one.
How does TWR differ from money-weighted return?
Time-weighted return removes the impact of cash flow timing, so it reflects pure investment performance and is the standard for comparing fund managers. Money-weighted return (an internal rate of return) is affected by when and how much money was invested, so it reflects the investor's actual experience.
Why chain sub-period returns geometrically?
Returns compound, so they must be multiplied rather than added. Linking (1 + r) factors and subtracting one gives the true cumulative growth. Simply averaging the sub-period returns would ignore compounding and produce an incorrect total.
How do I enter my sub-period returns?
Compute each sub-period's percentage return between cash flows and enter them in the fields provided. Leave unused fields blank or zero. The calculator links the non-empty returns to give the cumulative time-weighted return for the whole period.
Official sources
- U.S. Securities and Exchange Commission: Total return.
- U.S. Securities and Exchange Commission: Mutual funds and ETFs.
Reviewed by the CalculatorHub team, edited by James Graham, 16 June 2026. See our methodology.