Decomposing the Money-Weighted Rate of Return
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There has been a growing controversy about the methods used for calculating portfolio rate of return.The long-used and accepted time-weighted return calculation is in danger of being toppled from its pedestle as the only correct method.Many are now turning focus and consideration to the concept of using a money-weighted rate of return.This article may make you a convert or at least make you question the exclusive use of time-weighting methods.
Author: Stefan Illmer and Wolfgang Marty
There has been a growing controversy about the methods used for calculating portfolio rate of return.The long-used and accepted time-weighted return calculation is in danger of being toppled from its pedestle as the only correct method.Many are now turning focus and consideration to the concept of using a money-weighted rate of return.This article may make you a convert or at least make you question the exclusive use of time-weighting methods.
