Money-Weighted Return

Last updated: May 20, 2026

A return that respects the size and timing of every dollar you put in.

Quick Answer

What is Money-Weighted Return?

Money-weighted return weights each sub-period by the amount of capital invested at the time. It is mathematically equivalent to XIRR — the IRR that makes the net present value of all dated cash flows equal zero. It is the only return measure that reflects an investor's actual dollar experience over a portfolio with deposits and withdrawals.

0 = Σ CFᵢ / (1 + MWRR)^((dᵢ − d₀)/365)

Formula

0 = Σ CF_i / (1 + MWRR)^{(d_i − d₀)/365}

Identical formulation to XIRR. Solved iteratively (Newton-Raphson with bisection fallback).

Money-weighted return and XIRR are the same number computed the same way — different terminology used in different industries. Pension funds say "money-weighted." Spreadsheets say "XIRR."

Intuition — what is this number telling you?

If you contributed $1k early in a great year and $50k late in a flat year, your dollar-weighted experience is heavily flat-year-shaped — TWR would say "the asset did fine" but money-weighted return says "your dollars mostly sat through nothing." That is the right number for your real outcome.

Worked example

Step-by-step

See the worked example on the XIRR page — same calculation, different name.

What's a good Money-Weighted Return value?

Like XIRR, "good" money-weighted return is asset-class-dependent. Compare to the TWR of your benchmark over the same window — the gap is your timing skill.

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Frequently asked questions about Money-Weighted Return

Is money-weighted return the same as XIRR?

Yes — same calculation, same result. Different industries use different names.

When does money-weighted return diverge from time-weighted return?

Any time cash flows happen on uneven dates. If you bought heavily at a top, MWR < TWR. If you bought heavily at a bottom, MWR > TWR.

What does negative money-weighted return mean?

You contributed more than the portfolio is now worth, after weighting by holding period. The asset may have positive TWR while you have negative MWR.

How does Foliolytic calculate this?

Newton-Raphson on the full transaction-level cash flow series, with a bisection fallback if Newton fails to converge.

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