How do investors evaluate the performance of their portfolio? Very often, the first metric to turn to is returns. Yet, there are different ways of calculating returns, and each method can tell a different story.

When you log into your Syfe account, you will see two different returns displayed, “net return” and “TW return”. TW return stands for time-weighted return, and it’s one of the most useful metrics to evaluate how well Syfe has managed your portfolio. 

Understanding Time-weighted Return

You can think of time-weighted return as the change in value your portfolio would have experienced if all the funds you’ve ever deposited were invested at the same moment as your very first deposit. Simply put, it removes the effect of cash deposits and withdrawals on your portfolio. This is important because when money is flowing in and out of a portfolio, your actual rate of return can get distorted.