Dollar-Weighted Return

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Yet another name for the same thing: XIRR, money-weighted return, dollar-weighted return.

Quick Answer

What is Dollar-Weighted Return?

Dollar-weighted return is identical to money-weighted return and XIRR — the discount rate that makes the present value of all dated cash flows equal zero. The label varies by region and industry but the math is the same: a return that weighs each contribution by how long it stayed invested.

Dollar-weighted ≡ Money-weighted ≡ XIRR

Formula

0 = Σ CFi / (1 + DWR)(di − d0)/365
Same as XIRR formulation.

When you read "dollar-weighted return," "money-weighted return," or "XIRR" in finance literature, you are reading about the same calculation under three names.

Intuition — what is this number telling you?

The phrase "dollar-weighted" is most commonly used by US mutual fund regulators (it appears in SEC filings). The math is identical to XIRR — each contribution is weighted by the dollars contributed multiplied by the time invested.

Worked example

Step-by-step

See the worked example on the XIRR page.

What's a good Dollar-Weighted Return value?

Use this in the same context as XIRR — compare to TWR of your benchmark over the same window to measure timing skill.

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Related metrics

XIRR  ·  Money-Weighted Return  ·  TWR (Time-Weighted Return)

Frequently asked questions about Dollar-Weighted Return

What is the difference between dollar-weighted and money-weighted return?

Nothing — they are two names for the same calculation.

Is dollar-weighted return the same as XIRR?

Yes. Excel's XIRR function returns the dollar-weighted (money-weighted) annualized return.

Why is this measure preferred for retail investors?

Because it reflects your actual outcome. TWR is the fund's perspective; dollar-weighted is your perspective.

Does Foliolytic show this?

Yes — it is labeled "XIRR" in the metrics panel but the underlying number is identical to dollar-weighted / money-weighted return.

See Dollar-Weighted Return on your real portfolio

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