Time-Weighted Return Calculator
This time-weighted return calculator chains period returns into one figure that ignores deposits and withdrawals, showing how your portfolio performed.
What it does
The Time-Weighted Return Calculator chains a series of sub-period returns into a single compound return that ignores the timing and size of deposits and withdrawals. It shows how the portfolio itself performed, independent of when cash was added.
Data sources & parameters
This calculator uses standard financial formulas and runs entirely in your browser. It needs no external rate data — your result is computed only from the values you enter above.
We always strive to use the latest data for every variable so our results and reports are as accurate as possible. Even so, errors are possible — you should not rely on this tool or its report alone, and we accept no liability for any decision made based on it.
The formula
TWR = ((1 + r1) × (1 + r2) × (1 + r3) − 1) × 100, where r1, r2, r3 are the period returns
How it works
Each period return is converted into a growth factor, the factors are multiplied together to get the cumulative growth, and one is subtracted to express the result as a percentage. Because contributions are not part of the math, the figure isolates the manager's or fund's performance.
Where it is used
- Comparing a fund or manager against a benchmark on an equal footing
- Measuring performance when deposits and withdrawals happened mid-period
- Reporting returns the way regulators and fund fact sheets require
Worked example
A portfolio returns 10% in the first period, -5% in the second, and 8% in the third. Chained together, the time-weighted return is …, meaning one unit invested grew by that factor regardless of any cash flows.
What the time-weighted return calculator does
The time-weighted return calculator turns a series of period returns into one compound figure showing how a portfolio performed, without letting the timing or size of your deposits and withdrawals distort the answer. That is why the time-weighted return is the industry standard for reporting and comparing investment performance.
Why simple averages mislead
Suppose an investment gains ten percent in one period, loses five percent in the next, and gains eight percent in the third. Averaging the three gives about 4.33 percent per period, but three periods of 4.33 percent would compound to about 13.6 percent, more than the investment actually delivered.
Returns compound; they do not add. The five percent loss applies to a balance that has already grown, and the eight percent gain that follows applies to a balance that has already shrunk. Multiplying the growth factors together captures how each period builds on the last.
How the calculation works
Each percentage return is converted into a growth factor by dividing by one hundred and adding one: a ten percent gain becomes 1.10, a five percent loss 0.95, and an eight percent gain 1.08.
Multiplying the factors gives the cumulative growth of one unit invested at the start: 1.10 × 0.95 × 1.08 is about 1.1286. Subtracting one gives a time-weighted return of about 12.86 percent, unaffected by whether you added money along the way.
Why cash flows are removed
Contributions and withdrawals are usually your decision, not the fund manager's, so it would be unfair to credit or blame the manager for your timing.
If you invested a large lump sum just before a strong period, a method that weighted returns by the amount invested would make the manager look brilliant for timing that was yours. The time-weighted approach splits the record into sub-periods at each cash flow, measures the pure return within each, and chains them, so the manager is judged only on what the portfolio did with the money it held.
How to use the calculator
- Enter the percentage return for the first period.
- Enter the percentage return for the second period.
- Enter the percentage return for the third period.
The calculator shows the time-weighted return, the cumulative growth factor, and the number of periods chained. A growth factor of 1.13 means a unit invested at the start would be worth about 1.13 units at the end.
The chart plots each period return side by side, showing which periods drove the result and which held it back. One sharply negative period is often why otherwise healthy returns produce a modest compound figure.
Reading the result
Use the time-weighted return to compare two funds, or a fund against its benchmark, because it removes the noise of cash flows.
It does not measure your personal experience as an investor. The return on the money you actually committed, weighted by how much you had invested at each moment, is the money-weighted return, and it can differ substantially. The time-weighted return shows how the portfolio performed; the money-weighted return shows how you did.
Where it matters
- Comparing managers fairly requires a yardstick that ignores the deposits their clients happened to make.
- An index has no cash flows, so measuring your portfolio against it only makes sense on a time-weighted basis.
- Fund fact sheets and performance disclosures use time-weighted returns because they are comparable across investors.
Paired with a money-weighted return, it shows both how the investments performed and how your decisions shaped what you earned.
This article is general information only and is not financial advice.
About This Time-Weighted Return Calculator
Use this time-weighted return calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.
Frequently asked questions
What is a time-weighted return?
How does the time-weighted return calculator work?
How is a time-weighted return different from a money-weighted return?
Why does a time-weighted return remove the effect of deposits?
Can a time-weighted return be negative?
Is my data kept private?
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