Question

Is anyone familiar with time-weighted return and Holding period return?

Answer 1

Im confused how these methods even reflect the actual return

Answer 2

Ill given an example to illustrate my point

Answer 3

An investor purchases a stock for $50 at time t=0 and another share at t=1 for $65. At the end of year 1 and 2 the stock paid a $2 dividend. Also at the end of year 2 the investor sold both stocks for $70
Lets find the time weighted-return

Answer 4

Holding Period 1: Starting period = $50
Dividends = $2
Ending Period = 65
Hence
\[HPR=\frac{65-50+2}{50}=34 \%\]
Ehhh actually I see how it reflects the rate of return since originally it was worth 50 and at the end of the end of the period its worth 65
I keep confusing it with the money-weighted return where you separate the inflows and outflows