A portfolio manager is evaluating the performance of a client's growth-oriented equity portfolio over a one-year period. The client made a significant contribution of $100,000 at the six-month mark. The portfolio's initial value was $500,000, grew to $550,000 before the contribution, and ended the year at $680,000. What is the Money-Weighted Rate of Return (MWRR) for this portfolio over the year, expressed as a percentage, ignoring transaction costs?

Question: A portfolio manager is evaluating the performance of a client's growth-oriented equity portfolio over a one-year period. The client made a significant contribution of $100,000 at the six-month mark. The portfolio's initial value was $500,000, grew to $550,000 before the contribution, and ended the year at $680,000. What is the Money-Weighted Rate of Return (MWRR) for this portfolio over the year, expressed as a percentage, ignoring transaction costs?

Answer options:

• 18.7%
• 20.0% ✅ 21.5%
• 24.0%

Correct answer: 21.5%

Explanation: The MWRR considers the timing and size of cash flows. It is the discount rate that sets the Net Present Value of all cash flows (initial investment, contributions, withdrawals, and final value) to zero. In this case, solving iteratively for the IRR gives approximately 21.5%.