TWR measures portfolio performance by eliminating the effect of cash flows (deposits and withdrawals). It's the standard for comparing fund manager performance since it isolates investment decisions from investor behaviour.
TWR = [(1+R1) × (1+R2) × ... × (1+Rn)] - 1 where Ri = return between cash flows
TWR breaks the year into a new measurement period whenever outside money enters or leaves. That keeps the size and timing of the deposit from changing the investment return.
(1.10 × 0.95) - 1The two six-month holding-period returns are multiplied together. This is the return for the full one-year example.
€10,000 now + €10,000 at midyear → €19,950The larger amount was invested during the losing period. IRR reflects that timing, while TWR deliberately removes its effect.
AllInvestView calculates both TWR and IRR on your dashboard. Read our portfolio returns guide to understand which to use.