Dollar-Weighted Return
A dollar-weighted return provides a return between two points in time, incorporating all the cash in-flows, such as dividends, interest, and contributions, and all cash out-flows, such as withdrawals, from the portfolio. The dollar-weighted return differs from the simple arithmetic return and the time-weighted return because it gives more weight to periods where more funds are in the account or portfolio.
For example, imagine a retiree who is withdrawing funds from his account, slowly depleting the account. The dollar-weighted return will be weighted more towa