MWRR (Money-Weighted Rate of Return)

MWRR measures your personal real return based on when and how much you contributed. Complementary to TWRR. Index Balance shows both metrics.

Definition

The MWRR (Money-Weighted Rate of Return, also called IRR or Internal Rate of Return) measures the actual return obtained by the investor taking into account the timing and size of each contribution and withdrawal. Unlike TWRR, MWRR is affected by the timing of contributions: if you invested a large amount just before a market fall, your MWRR will be worse than the market's TWRR.

MWRR answers the question "How much have I personally earned?" while TWRR answers "How much did the market return?". For an individual investor making monthly DCA contributions, MWRR may differ slightly from TWRR because contributions are made at different price points.

Both metrics are complementary. In Index Balance you can see both: TWRR for comparison with the benchmark, and MWRR to understand your personal real return.

Practical example

You invest €5,000 in January when the fund is at €100. In July the fund is at €90 and you take the opportunity to invest €15,000 more. By December the fund recovers to €105. Your TWRR is +5% (the fund rose from 100 to 105). But your MWRR is higher, because you invested a large amount when the fund was cheap at €90.