A form of return that is used to measure the performance of an investment, reflecting the amount of money that was earned during the measurement period. This return takes into consideration the roles of both the investment manager and the investor in producing it. The money-weighted return (MWR) reconciles the beginning market value and additional cash flows into the invested funds to the ending market value. It reflects not only the amount of the cash flows but also their timing.

If there is an intermediate cash flow, calculation needs to take into account the amount and timing of the cash flow, using a weighting adjustment. For example, calculating the MWR for a one-year period would require the following adjustment:

period weight = time into total period/ months invested

(e.g. the period weight for January is 1/11, for February is 2/10, for March is 3/9, etc).

If there are no intermediate cash flows, the MWR calculation would simply use the following formula:

MWR = (gain or loss /investment made) x 100

Gain or loss reflects capital gain and income; investment made is the average capital employed.