Glossary · Performance and reporting
Time-weighted return measures the performance of a portfolio while removing the effect of client deposits and withdrawals, isolating the manager's results.
It answers the question: how did the strategy perform? It is the right measure for comparing a manager against a benchmark or against another manager.
It is not the measure of what the client actually experienced, which is why a client who added money at the wrong moment can be shown a good number and feel a bad one.