Calculate TWR (Time Weighted Return) Performance [edited]

dpags

Does Quicken have any plans to add TWR investment performance calculation to the system?

NotACPA

We're other users and, thus, have no idea about this. And, Q never pre-announces new features until JUST before they're released.

Jim_Harman

For the uninitiated, TWR stands for Time Weighted Return. I edited the title to expand the acronym.

Quicken's Investing > Performance > Growth of $10,000 chart is supposed to be based on a TWR calculation, but unfortunately Quicken's formula is flawed and gives incorrect results if there are large cash inflows or outflows near the start of the period.

For a further discussion of this topic and other performance measures, also started by @dpags, please see this discussion

https://community.quicken.com/discussion/7939992/investment-performance

UKR

For reference, you are talking about the Time-Weighted Rate of Return (TWR) Formula (investopedia.com) , aren't you?

dpags

Yes. Internal rate of return does not match time weighted returns for public securities. It is impossible to check and compare broker returns to each other and to benchmarks. I know of Quicken users that love Quicken but use an external portfolio accounting software to manage their investments. I am looking for either Quicken to add time weighted returns (preferred) or an external software program. Thanks.

Jim_Harman

My understanding of TWR is that it most useful for comparing the performance of different securities or managers, because it is not affected by the timing of cash flows into or out of the security or account. That is why the SEC requires mutual funds to publish their "Growth of $10,000" figures.

That is apparently the intent of Quicken's Investing > Performance > Growth of $10,000 chart.

It would certainly be nice if Quicken fixed the calculations behind that chart so that it shows a correct TWR and the the results are not affected by cash flows near the beginning of the analysis period.

IRR, what Quicken calls "Average Annual Return" and Morningstar calls "Personal Return", does include the effect of the timing of your cash flows and thus is useful to answer questions like "What was the impact of my buying and selling decisions?"