Internal Rate of Return (IRR) is the single rate of return at which the beginning market value plus additions grows to equal the ending market value minus withdrawals. PortfolioCenter calculates IRR using an "iterative process". Basically … [Read more...]
What does “yield” mean on PortfolioCenter reports?
In finance, yield is typically a measure of the amount of cash that a security produces for its owner. However, the term is often used to refer to different mathematical formulas in different situations. According to Investopedia, yield is: The … [Read more...]
What’s the difference between Time Weighted Return and Internal Rate of Return?
PortfolioCenter provides two main performance calculations: Internal Rate of Return (IRR) and Time-Weighted Rate of Return (TWR). What's the difference? IRR measures the overall growth of the portfolio. If your goal is to reach a $1 million by … [Read more...]
Why is there a positive Dollar Gain and a negative Time Weighted Return? Or vice versa?
How can there be a positive Dollar Gain (DG) and a negative Time Weighted Return (TWR)? Or vice versa? These "strange but true" returns occur more frequently than you might expect. First, remember that TWR measures the growth of the average … [Read more...]
3 ways to handle the Performance Inception date in PortfolioCenter
The Performance Inception date is the date from which PortfolioCenter begins measuring performance for a particular account. If you want accurate performance returns, this date must be correct. Fortunately, you can let PortfolioCenter set this date … [Read more...]