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How is my rate of return calculated?

The rate of return on your dashboard is a Money-Weighted Rate of Return, calculated net of your fees and annualized. A Money-Weighted Return is the best reflection of your overall performance, as it takes into account the money deposited to and withdrawn from your portfolio. This makes it a more personalized rate of return than other methods. It is also known as the Internal Rate of Return (IRR). Money-Weighted returns are the industry standard for investment account performance reporting.

The Money-Weighted Return is calculated using this formula:


CF = Cash Flows
R = Return
W = (CD − D)/CD 
CD = calendar days in period
D = days since beginning of period
MV = Market Value

Other common methods for calculating investment returns are the Time-Weighted Rate of Return and Simple Rate of Return. The Money-Weighted Return is impacted by cash flows in and out of your account, and can vary from a Time-Weighted or Simple Rate of Return which do not account for cash flows. 

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