Money weighted rate of return meaning

A money-weighted rate of return (MWRR) describes the investment return on a portfolio or fund over a stated period, taking into account the timing and amount of cash paid in and out (contributions, withdrawals, fees). It is effectively the internal rate of return (IRR) that equates the present value of all cash flows with the portfolio's ending value. In legal practice, MWRR appears in investment management agreements, pension scheme and trustee reports, client disclosures, and expert evidence when valuing losses, causation or performance. It is a descriptive financial measure rather than a term generally defined in UK or Irish legislation or case law. Key features: it reflects investor-specific outcomes and is highly sensitive to external cash flows, which are often outside the investment manager's control. For that reason, it is not suitable for comparing manager skill or for benchmarking; time-weighted returns are typically preferred for comparative performance. Usage and meaning are broadly consistent across England and Wales, Scotland, Northern Ireland and Ireland. When relying on MWRR, specify the period, cash flow timing conventions, inclusion/exclusion of fees and taxes, valuation basis and data sources to ensure results are reproducible and compliant with reporting obligations.