If funds are deposited into the investment portfolio prior to a period of superior performance ,money weighted return will be higher than time weighted return
If funds are deposited into the investment portfolio just before a period of relatively poor perfoermance ,money weighted return will be lower than time weighted…
If I deposit another 1000, and that 1000 earns me 20%, I should have 1100+1200. Why is 1100 multiplied by 1.2? Sorry, if this is a very silly question to ask.
When I wrote “it earns 20%”, the “it” was the entire account, not just the new deposit. All the money’s in the same account, so it’s all earning the same return.