Rentabilidad ponderada por tiempo frente a ponderada por dinero: qué cifra creer

If you compare trading providers, fund factsheets or signal services from Europe, you see percentages everywhere. This guide explains time-weighted vs money-weighted return with a worked euro example, shows a third calculation that should make you suspicious, covers the currency question that matters to every euro-based investor, and ends with a checklist for reading any performance claim.

What is time-weighted return?

Time-weighted return (TWR) splits the record into sub-periods at every deposit or withdrawal, measures the return of each sub-period, and links them together by multiplication:

TWR = (1 + r1) × (1 + r2) × ... × (1 + rn) − 1

Because each sub-period is measured on its own, the size of the cash flows has no effect on the result. That is why it is the standard for judging a manager or a strategy. The Global Investment Performance Standards (GIPS), maintained by CFA Institute, require time-weighted returns for all portfolios except a narrow group in which the firm controls the external cash flows, such as closed-end or fixed-life funds. A strategy should not look better simply because a client happened to deposit before a good month.

What is money-weighted return?

Money-weighted return (MWR) is the internal rate of return of the investor's actual cash flows: every deposit, every withdrawal and the ending value. It answers a personal question: what rate did my money earn, given when I put it in and took it out? In a spreadsheet it is the IRR function, or XIRR when the dates are irregular.

Because each period is weighted by how much money was invested at the time, a bad month after a large deposit hurts the MWR far more than a bad month when the account was small.

Time-weighted vs money-weighted return: a worked example in euros

Take a hypothetical account.

Both results are correct. Judged fairly, the strategy gained 8 percent across the two months. The investor, who added most of the money just before the loss, is down €3,200. A provider that shows only the +8 percent is describing the strategy, not what its typical client experienced. When clients tend to add money after strong months, which is common, the money-weighted picture across all clients can be much worse than the headline.

Which return should you trust when judging a trading provider?

Use the time-weighted figure to judge skill and the money-weighted figure to judge your own outcome. The useful question is not "which is the real return?" but "which question does this number answer?"

What calculation should make you suspicious?

Neither TWR nor MWR is the problem. The problem is a third method: profit divided by the first deposit, ignoring every later deposit.

Imagine an account that starts with €1,000. The owner then deposits €50,000 and the account makes €2,000 of profit. Profit divided by the starting balance gives +200 percent. Measured against the capital actually at work, the gain is about 3.9 percent. Same account, same trades, and a headline more than 50 times larger.

This is why an unexplained percentage on a screenshot is not evidence. Ask how it was calculated. A track record on an independent verification platform at least shows deposits and withdrawals separately from trading gains, so you can check. Our guide to reading a Myfxbook track record walks through those fields, and TIC publishes its own independently verified record on the results page for exactly this kind of checking.

Which currency is the return measured in?

For a European investor this question matters as much as the method. Many trading accounts are denominated in US dollars, and a strategy can return +5 percent in dollars while a euro-based investor earns almost nothing.

Hypothetical example: the account gains 5 percent in USD over a year while EUR/USD rises from 1.08 to 1.13. Converted back to euros, the return is 1.05 × 1.08 ÷ 1.13 − 1, about +0.35 percent. The opposite currency move would have flattered the result. When a provider quotes a return, ask in which currency it is measured and whether the currency effect is separated from trading performance.

A checklist for any performance claim

Before you trust a percentage, get answers to these questions:

1. Is it time-weighted, money-weighted, or profit over first deposit?
2. Which dates does it cover, and does it include the worst period?
3. Is it before or after fees, spreads and commissions?
4. In which currency, and is the currency effect separated?
5. Is it verified from the broker account, or self-reported?
6. What was the maximum drawdown over the same dates?

The last question matters because a return without its risk is half a picture. Our explainer on drawdown, the Sharpe ratio and track records covers the risk side, and our due diligence checklist for trading providers covers the rest.

The honest summary

A high time-weighted return does not mean investors made money, and a negative money-weighted return does not mean the strategy is bad. Many investors in a sound strategy still lose by adding money after strong runs and withdrawing after drawdowns. Knowing which question a number answers protects you from a misleading headline and from your own timing.

Sources

• CFA Institute, Overview of the Global Investment Performance Standards (2026 refresher reading)
• CFA Institute, GIPS standards
• Microsoft Support, XIRR function

All figures are hypothetical and chosen for clear arithmetic.