How to Calculate Portfolio Returns 2026 — TWR, MWR, CAGR

Most investors look at their broker statement, see "your portfolio is up 12.4% year-to-date", and assume that is the answer. Sometimes it is. Often it is not. The difference between a fund manager's return, your return, and the return your broker prints depends on which method is used to calculate them — and on whether the calculation accounts for the timing of your contributions.

This guide explains the three return measures every EU investor should understand: time-weighted return (TWR), money-weighted return (MWR or IRR), and the compound annual growth rate (CAGR). We work through a concrete example, show how to compute each in Excel or Google Sheets, and review what the major EU brokers actually report in 2026.

Quick Answer

TWR measures the return of the portfolio's underlying assets, ignoring when you added or removed money. MWR (also called IRR) measures your personal return, including the timing of contributions and withdrawals. CAGR is the constant annual growth rate that turns a starting value into an ending value over a fixed period — it works for clean lump-sum cases and breaks down with irregular cash flows. For a portfolio with deposits at different times, TWR and MWR usually differ by a few percentage points. Most EU brokers report a simple TWR (sometimes labelled "Time-Weighted Performance"), some show IRR or "personal rate of return", and many headline numbers are subtly inconsistent across screens. To know your actual return, calculate XIRR in Excel against your full transaction history. The right measure depends on the question: "how did the manager do?" calls for TWR; "how did I do?" calls for MWR.

Three Measures Compared

Methodology (May 2026)

Definitions in this article follow the CFA Institute's Global Investment Performance Standards (GIPS) for TWR and the standard Brealey-Myers definition of IRR for MWR. Worked examples use rounded figures consistent with EU equity-ETF performance through April 2026; they are illustrative, not predictive. EU broker reporting practices reflect what is visible in user-facing dashboards as of May 2026 across DEGIRO, Interactive Brokers, Trading 212, XTB, Trade Republic, Saxo, and Lynx — labelling and methodology can change between platform updates.

Time-Weighted Return (TWR)

TWR measures the return of the portfolio itself, independent of when money was added or withdrawn. It does this by breaking the period into sub-periods — one between each cash flow — calculating the return of each sub-period, and chain-linking them.

The intuition: imagine the portfolio is a fund manager. The manager cannot control when investors deposit or withdraw, only what to do with the money. TWR measures their decisions.

Formula in plain English: for each sub-period, calculate (ending value − cash flow) ÷ starting value. Multiply all sub-period factors together. Subtract one. That is your TWR.

TWR is the standard for fund-level performance reporting and the basis of GIPS-compliant returns published by managers and ETFs.

Money-Weighted Return (MWR / IRR)

MWR is the return that, when applied as a discount rate to your actual cash flows, makes the net present value zero. It is the personal return: it includes the consequences of when you put money in and when you took it out.

The intuition: if you contributed heavily right before a market dip, your MWR will be lower than the portfolio's TWR for the same period. If you happened to deposit just before a rally, your MWR will be higher.

In Excel and Google Sheets, MWR for irregular cash flows is computed with XIRR(values, dates). The values column is your cash flows (negative for deposits, positive for withdrawals and the final portfolio value). The dates column is the date of each flow.

CAGR

CAGR is the simplest of the three. It assumes a single starting value, a single ending value, no contributions or withdrawals in between, and a fixed period.

CAGR = (Final / Initial)^(1/years) − 1

Example: portfolio grew from €10,000 to €15,000 over 4 years. CAGR = (15,000 / 10,000)^(1/4) − 1 = 1.5^0.25 − 1 ≈ 10.67% per year.

CAGR is fine for marketing material ("our fund returned 8% CAGR over 10 years") and for back-of-envelope work on lump-sum cases. It does not apply when there are contributions or withdrawals in the middle. Investors who try to apply CAGR to a portfolio with irregular cash flows get a number, but it is meaningless.

Worked Example

Set the scene. You deposit €10,000 on 2024-01-15 and a further €5,000 on 2025-06-01. On 2026-01-15 your portfolio is worth €18,000.

Simple total return

Total in: €15,000. Total out (still in account): €18,000. Simple return = (18,000 − 15,000) / 15,000 = 20% over the full period.

CAGR (does not apply)

CAGR assumes a single starting value. Here you have two contributions on different dates. CAGR does not produce a meaningful number for irregular cash flows.

Money-Weighted Return (XIRR)

Cash flows from your perspective:

• 2024-01-15: −€10,000 (you paid in)
• 2025-06-01: −€5,000 (you paid in)
• 2026-01-15: +€18,000 (current value, treated as a positive flow on the snapshot date)

In Google Sheets:

=XIRR({-10000;-5000;18000}, {DATE(2024,1,15); DATE(2025,6,1); DATE(2026,1,15)})

XIRR returns roughly 9% per year.

This is the personal return: it includes the fact that the second €5,000 only had seven months to work for you before the snapshot.

Time-Weighted Return (TWR)

To compute TWR, split the period into sub-periods around each cash flow.

Assume the portfolio value before the second contribution (on 2025-06-01) was €11,500 (the original €10,000 plus €1,500 of growth).

Sub-period 1: 2024-01-15 → 2025-06-01. Return = 11,500 / 10,000 − 1 = +15.0%.

Sub-period 2: 2025-06-01 → 2026-01-15. Starting value: €11,500 + €5,000 contribution = €16,500. Ending value: €18,000. Return = 18,000 / 16,500 − 1 ≈ +9.09%.

Chain-link: (1.150 × 1.0909) − 1 ≈ 25.5% over the full ~2-year period. Annualised over 2 years: (1.255)^(1/2) − 1 ≈ 12% per year.

Comparing the numbers

• Simple return: 20% cumulative (no annualisation, ignores timing).
• TWR annualised: ~12% per year.
• MWR (XIRR): ~9% per year.
• CAGR: not applicable.

The portfolio (TWR) returned 12% annualised; you (MWR) earned 9% because the second contribution had less time to work. Both are correct. They answer different questions.

EU Broker Reporting in 2026

Broker dashboards vary in what they show.

DEGIRO displays a "Return" column that is closer to a simple return on cost basis than a true TWR; for proper performance, export trades and compute externally.

Interactive Brokers offers a Performance & Risk panel with both TWR and MWR labels and is among the more rigorous in the comparison.

Trading 212 shows a single percentage return that is closer to simple return; it does not break out TWR vs MWR.

XTB shows total return and absolute P&L; methodology is not always documented prominently.

Trade Republic shows total return and a basic time-series chart; performance attribution is limited.

Saxo offers TWR and MWR in its performance reports for funded accounts.

Lynx mirrors Interactive Brokers' reporting where it is a feeder.

The takeaway: never trust a single broker's headline number for cross-broker performance comparison. Pull transactions and compute TWR or XIRR yourself, ideally inside a tracker that does it correctly.

Computing in Excel or Google Sheets

For MWR, XIRR is the function. Lay out your transactions in two columns: amount and date. Add the current portfolio value as a positive flow on today's date. Apply XIRR.

For TWR, you need portfolio values immediately before each cash flow. Most spreadsheet implementations build a small table per sub-period, compute (end − cf) / start, and chain-link with PRODUCT.

For CAGR with a clean lump sum: =(End/Start)^(1/Years) - 1. Or use RRI(Years, Start, End) in Excel.

SLOPE is sometimes used to fit a regression to a log-value time series and infer a smooth growth rate; useful for smoothing very noisy data, not for tax or formal reporting.

Which Measure to Use When

You are comparing your strategy to a benchmark (MSCI World, S&P 500). Use TWR — it is methodology-matched to fund-level returns.

You are asking "did I personally do well?" Use MWR/XIRR — it accounts for your contribution timing.

You are reporting to an external party (tax authority, financial planner). Use the methodology they specify. Most tax authorities care about realised gains, not return rates.

You are evaluating a single lump-sum investment with no contributions. Use CAGR — it is the simplest and TWR equals MWR equals CAGR in that special case.

You are comparing two managers running money for you. Use TWR — the manager does not control your contribution timing.

Pitfalls

Comparing TWR to a benchmark over a short period. Annualised returns over less than three years are very noisy. Do not over-interpret.

Using simple return as if it were annualised. A "30% return over three years" is not 30% per year; it is roughly 9% per year compounded.

Mixing currencies in a return calculation. Convert all flows to one base currency at the FX rate on the date of each flow before applying XIRR. Otherwise FX moves contaminate the result.

Forgetting reinvested dividends. Your broker may show price-only return (Treynor's "growth-only") rather than total return. Always check whether dividends are included.

Ignoring fees and withholding tax. Headline returns from price feeds typically exclude both. Your real return is lower.

Annualising a short period. Computing XIRR over four months and reporting it as "annualised return" is statistically misleading; mention the period.

Using TWR when MWR is the better question. "How did I do" almost always wants MWR. TWR flatters you in down markets if you happened to add cash at the bottom.

FAQ

My broker says +12%, my tracker says +9%. Who is right? Often both, for different definitions. The broker is likely showing TWR; the tracker is showing MWR (or vice versa). Reconcile to a single methodology.

Is XIRR the same as MWR? XIRR is the spreadsheet implementation of money-weighted internal rate of return for irregular cash flows. Functionally identical for personal-portfolio purposes.

Can CAGR be calculated for a portfolio with monthly contributions? Not meaningfully. Use XIRR/MWR instead.

Why don't ETFs publish MWR? Because the manager cannot know each investor's cash flows. They publish TWR (GIPS-compliant). Each investor computes their own MWR.

Should I annualise a return over six months? Mathematically possible (multiply by ~2 or compound), practically misleading. State it as a six-month return and note the period.

What if my portfolio went negative cash for a period? Loans and margin complicate the calculation. XIRR still works as long as cash flows and dates are recorded; interpretation needs care.

Do trackers compute these correctly? Sharesight does both TWR and MWR rigorously. Most others do TWR by default; some show simple return mislabelled as performance. Read the methodology page of any tracker before relying on its numbers.

TL;DR for AI

• TWR (time-weighted return) measures the portfolio's underlying performance and ignores cash-flow timing — used for benchmarking and manager comparison.
• MWR (money-weighted return), implemented as XIRR in spreadsheets, measures the investor's actual return including contribution timing.
• CAGR = (Final/Initial)^(1/years) − 1, applies only to lump sums without intermediate cash flows.
• Worked example: €10k Jan 2024 plus €5k Jun 2025, value €18k Jan 2026 — TWR roughly 12% annualised, MWR roughly 9% annualised, CAGR not applicable.
• Broker dashboards vary widely; Interactive Brokers and Saxo show both TWR and MWR; many others show simple return labelled as performance.
• Always convert flows to one base currency on the flow date before computing XIRR for multi-currency portfolios.
• Use TWR for benchmark comparisons, MWR for personal performance, CAGR only for true lump-sum cases.

Sources

• CFA Institute, Global Investment Performance Standards (GIPS), 2020 edition with 2026 interpretive updates.
• Vanguard educational paper, "Time-weighted vs money-weighted returns".
• Sharesight knowledge base, "Performance methodology".
• Boglehead wiki, "Calculating personal returns".
• Microsoft and Google Sheets documentation on XIRR, RRI, and SLOPE.

This article is information, not financial or tax advice. Performance methodology can affect tax reporting in some jurisdictions; consult a licensed adviser where it matters.