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Money-weighted return (MWR)
Also called MWR, dollar-weighted return. A CFA term, defined in plain English with the distinction examiners test.
What it means
The IRR of a portfolio including the timing and size of every contribution and withdrawal.
The exam angle
Measures the investor’s experience, not the manager’s skill, because the client controls the cash flows. Use it to judge an account, never to compare managers.
Where it appears in the syllabus
- Quantitative MethodsCFA Level I · exam weight 11–14% · Returns and benchmarks, time value, distributions, portfolio maths, regression.
- Performance MeasurementCFA Level III · exam weight 5–10% · Attribution, appraisal, manager selection and the GIPS standards.
Related terms
- AlphaReturn in excess of what the asset’s risk exposures would predict.
- Time-weighted returnThe compound growth of one unit of currency in a portfolio, with the effect of external cash flows removed by…
- AnnuityA series of equal cash flows at equal intervals.
- Arithmetic meanThe sum of the observations divided by their number.
- Bayes’ formulaA rule for revising the probability of an event in the light of new information, using how likely that information is…
- BootstrapResampling the observed data with replacement to estimate the sampling distribution of a statistic, without assuming a…
Educational content only. This is not financial, investment, legal or regulatory advice. Check the official curriculum for your own exam before relying on any definition here.
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