Monday, May 8, 2023

Dollar Weighted Returns and Market Timing

Retail investors are generally poor market timers. As such, the return they actually earn (what we call dollar weighted, or asset weighted, returns) is generally much lower then the return a fund manager otherwise provides (what we would call compounded buy and hold returns). Check out this article (WSJ) for more on the return gap across different fund types and different levels of market volatility.