What Is Time-Weighted Return (TWR)? - Learn About Economics

Описание: What Is Time-Weighted Return (TWR)? In this informative video, we will discuss Time-Weighted Return (TWR) and its significance in measuring investment portfolio performance. TWR is a method that allows investors to assess the growth of their portfolios without being affected by cash flows such as deposits or withdrawals. By focusing on the actual performance of investments, TWR provides a clearer picture of how well a portfolio is doing over time.

We will break down the calculation process of TWR, explaining how to segment the investment period into smaller sub-periods based on cash flows. Each sub-period's simple rate of return will be calculated, and we will show how these returns are combined to give a final TWR figure. This approach ensures that your performance measurement remains unbiased, allowing for better comparisons across different portfolios or investment managers.

Understanding TWR is essential for investors and analysts alike, as it helps evaluate the effectiveness of investment strategies and management skills. Join us as we explore this important metric and its application in the world of finance. Don’t forget to subscribe for more engaging content that helps you navigate the complexities of economics and investments.

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