Scope and interpretation
FINRA contrasts TWR with the money-weighted IRR in its 2020 document 20-21.[1](#source-savx-returns) This is a mathematical definition, not a statement about the current validity of American advertising rules. TWR helps describe the result of managing one unit of capital independently of the size of external contributions.
It is not equal to the cash share earned by the owner from all contributed amounts. The portfolio boundary must be defined: an internal transfer does not become an external contribution, while a payment inside the boundary may already be included in the valuation. Comparisons should state the horizon, currency, expenses and treatment of distributions. A percentage for the whole interval must not silently be called annual. A high TWR does not prove that a particular owner received the same result.