Skip to main content

Mutual Funds - Portfolio Calculations

Updated this week

The TWR calculation method is a standard industry method considered accurate for the calculation of your investments.

Example:

  • You invest £1,000 initially. The fund grows 10% → value is £1,100.

  • You add £500 more → total £1,600.

  • The fund then grows 23.75% → value rises to £1,980.

Divide into two periods:

  • Period 1 return = (1,100 / 1,000) - 1 = 10%

  • Period 2 return = (1,980 / 1,600) - 1 = 23.75%

TWR = (1 + 0.10) × (1 + 0.2375) - 1 = 36.13% overall growth, ignoring the timing and amount of your deposits.


However, it's possible that you see some odd numbers/percentages in your app that can be explained as follows:

  • TWR can be negative even if you made money overall, because TWR looks at the percentage returns, not just your final profit. If you suffer a large loss with a small investment early on, TWR reflects that big percentage drop, even if you later add more money and end up with a profit.

    Example:

    • Invest £100 → drops 99% to £1

    • Add £10,000 → grows 13% to £11,301

    • You made £1,200 overall, but TWR = –98.9% (that early drop counts a lot in the calculation).

  • TWR can be positive even if you lost money overall, because it captures strong performance on smaller amounts before you invested more. If you make good percentage gains early (with a smaller amount), the TWR is high, even if you later invest more and those new funds lose value.

    Example:

    • Invest £100 → grows 50% to £150

    • Add £10,000 → drops 10% to £9,135

    • Your overall loss is –£965, but TWR = +35% (thanks to the early gain).

Remember the colours in the app:

  • Green Line = Investment performance

  • Purple Line = Your net invested money

Did this answer your question?