Time-weighted vs. Money-weighted return
While there are a number of ways to calculate an investment rate of return, the time-weighted rate of return calculation is the more common method used in the investment industry. However, by early 2017, all investors will receive an annual money-weighted rate of return, included with a new annual investment performance report. Both are valid and acceptable calculation methods, but each has different uses and can be appropriate in different circumstances.
For a simple explanation of the differences between time-weighted vs. money-weighted return, click here.
For a detailed explanation of the differences between time-weighted vs. money-weighted return click here.