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Time-weighted return. Related Articles. Time-weighted returns is a measure of the compound rate of return of a portfolio over a stated period of time. It requires a set of sub-period returns to be calculated whenever there is an external cash flow, such as a deposit or withdrawal from the portfolio.
Applying the above formula and solving for IRR we get: IRR or money-weighted returns = -8%. This tells the investor about what she actually earned on the money invested for the entire three year period. Note that this return is negative because a significantly large amount of money was invested in the year of negative returns compared to other years.