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Topic starter
March 29, 2021 4:21 AM
Here is the link to an excellent article explaining the differences between Time-Weighted Return (TWR) and Internal Rate of Return (IRR). Both measurements meet Guide to Global Investment Performance Standards, formerly AIMR-PPS.
Using different input the example could skew the final results in exactly the opposite direction.
If you are familiar with the Investment Account Manager (IAM) software, the benchmarks are calculated using TWR while the individual portfolio uses the IRR calculation. The reason for taking different approaches is covered in the article.
Lowell
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