Money Weighted Return

The money weighted return is a measure of the internal rate of return of a portfolio that accounts for the timing and size of cash flows. Unlike time weighted return, this metric is sensitive to when capital is added or withdrawn, making it a better reflection of the actual investor experience.

If an investor adds a large amount of capital right before a market rally, their money weighted return will be higher than the time weighted return. This is useful for individual investors who control their own capital allocation decisions.

In the context of crypto, it highlights the importance of market timing for the individual user. It effectively measures the combined result of both investment strategy and capital timing.