By Scott Ronalds

We’re changing the way we calculate and report the rate of return on clients’ account statements. Effective this quarter (Sept. 30, 2015), we’ll show your portfolio’s money-weighted rate of return (MWRR) instead of its time-weighted rate of return (TWRR). We have reported the latter (TWRR) since our inception in 2007; more on the difference between the two in a moment.

We’re making the change because the Canadian Securities Administrators (CSA) has mandated that all investment providers report money-weighted returns to their clients starting next summer. We’ve chosen to jump ahead of the curve and make the change sooner.

Put briefly, money-weighted returns take into consideration the impact of your contributions and withdrawals to/from your portfolio and are therefore a more accurate portrayal of your personal investing experience. This method, however, can be inappropriate for comparing returns against an index, benchmark or other funds, as a timely contribution (e.g. a purchase when a fund is down) or an untimely withdrawal (e.g. a redemption when a fund is down) can have a notable impact on your personal rate of return. The time-weighted approach is more appropriate in such instances. (Note: all mutual fund returns will continue to be reported using the time-weighted approach; it is individual client returns that will be reported using the money-weighted approach.)

If you’re interested in further details, check out our website, where we provide finer points on the difference between the two methods of performance reporting and an example to help clarify. And for the math fans out there, we provide a thorough explanation of the calculations in an in-depth paper on the topic.

As always, feel free to call us at 1-888-888-3147 if you have any questions.