Time Weighted Return

Time-weighted return is a method of calculating investment performance that eliminates the distorting effects of cash inflows and outflows. By breaking the investment period into sub-periods based on the timing of cash flows, it isolates the performance of the portfolio manager or the strategy itself.

This is particularly important for crypto funds or managed accounts where investors add or remove capital frequently. It measures how much one dollar invested at the start of the period would have grown.

This approach ensures that the performance metric is not biased by the timing or size of investor deposits. It is the industry standard for evaluating the efficacy of trading strategies.

In the context of volatile assets, it provides a clear view of how well the underlying assets performed, independent of the investor's behavior.