Why two tools report different returns on the same portfolio
Time-weighted, money-weighted and simple return measure different things. Which one answers your question depends on what you are actually asking.
August 15, 2026 · 3 min read
You check two apps on the same day, for the same accounts, and they disagree about your return. Neither is broken. They are answering different questions.
There are three common ways to express portfolio performance, and the gap between them is largest for exactly the investors who contribute regularly — which is most people.
Simple return
Current value minus what you put in, divided by what you put in.
It is honest about one thing: how much money you have made. It is close to useless for judging how your investments performed, because it has no concept of time. A 40% simple return over eleven months and over eleven years are not comparable, and the figure cannot distinguish them.
It also breaks in a specific way once you contribute regularly. Money added last month has had no opportunity to grow, but it sits in the denominator dragging the percentage down. Diligent contributors see a number that understates how their holdings actually did.
Time-weighted return
Time-weighted return removes the effect of contribution timing entirely.
It works by cutting the history into sub-periods at every cash flow, computing the return within each sub-period, and chaining them together. Because each sub-period measures only what the holdings did, deposits and withdrawals cannot distort the result.
This is the industry-standard measure, and it is what fund fact sheets report. Its purpose is comparability: it answers "how did these holdings perform?" — which is the right question when comparing against an index or against a fund.
What it deliberately ignores is whether you had much money invested at the good times. That is a feature. A fund manager cannot control when investors deposit, so judging them on it would be meaningless.
Money-weighted return
Money-weighted return — internal rate of return — does the opposite. It weights each period by how much money was actually at work.
It answers "how did I do?" If you happened to make a large contribution just before a strong run, your money-weighted return exceeds the time-weighted return, and that gap is real: you genuinely have more money than someone who owned the same holdings with a different deposit schedule.
The reverse is also true, and less pleasant.
A worked example
You start the year with $10,000. It rises 20% over six months to $12,000. You then contribute $50,000, and over the remaining six months the whole portfolio falls 10%, ending at $55,800 against $60,000 contributed.
- Time-weighted: 1.20 × 0.90 − 1 = +8%. The holdings had a good half and a bad half.
- Money-weighted: meaningfully negative. Most of your money was only present for the decline.
- Simple: −7% on $60,000 in.
All three are correct. If you want to know whether your holdings kept up with the index, +8% is the relevant figure. If you want to know whether you have more money than you started with, it is not.
Which one to look at
Use time-weighted whenever you are comparing — against a benchmark, against a fund, against a previous strategy. It is the only one of the three that makes such a comparison valid.
Use money-weighted when you are asking about your own outcome, particularly across accounts with different contribution histories.
Treat simple return as a statement of profit, not of performance.
Two further things that move the number
Currency. If you hold US-listed securities and report in Canadian dollars, exchange rate movement is part of your return. A weakening Canadian dollar raises the reported return on US holdings. That is a real economic effect you experienced, not a display artefact — but it means a portion of your return had nothing to do with the securities you picked.
Price return versus total return. Most published index figures are price returns and exclude dividends. If your own figure includes dividends received and you compare it to a price-return index, you are comparing on unequal terms and flattering yourself by roughly the dividend yield.
When a tool reports a return, the useful question is which of these it computed, and whether the benchmark beside it was computed the same way.
This article is educational and general in nature. It is not investment, tax, or legal advice, and it does not take your own circumstances into account. Verify tax treatment with the CRA or a qualified tax professional.