"|Shot|Duration|Visual Design|Dialogue| |----|----|----|----| |1|0:00 - 0:15|The video kicks off with a high - tech scene of financial data flowing, with various investment figures and curves shimmering across the screen. The camera gradually zooms in, and the title ""Money - Weighted vs Time - Weighted Return"" emerges. The font has a three - dimensional metallic texture, accompanied by subtle light and shadow flickering effects|(Voice - over, full of appeal) ""In the domain of Quantitative Methods, accurately evaluating investment performance is of utmost importance. Today, we're going to explore two pivotal metrics: the Money - Weighted Return and the Time - Weighted Return. These concepts are fundamental to understanding the true returns of your investments.""| |2|0:15 - 0:45|The scene switches to a clean, white - background interface. On the left, a title ""Money - Weighted Return (MWR)"" and a definition text box appear: ""The Money - Weighted Return (MWR), often referred to as the Internal Rate of Return (IRR), considers the timing and size of cash flows in and out of the investment. It reflects the rate of return the investor actually earned based on the amount of money invested over time."" On the right, a dynamic animation plays, showing an investor making deposits and withdrawals at different times, with the value of the investment portfolio fluctuating with capital movements and market changes|(Voice - over, clear and professional) ""Let's start with the Money - Weighted Return. Also known as the Internal Rate of Return, MWR takes into account when and how much money you invest or withdraw. It shows the actual return you've earned, considering the amount of capital you've had invested over time. For instance, if you inject more funds during a bull market or pull out during a downturn, MWR will incorporate these cash flow variations.""| |3|0:45 - 1:30|The formula for MWR \[ \sum \frac{C_t}{(1 + r)^t} = 0 \] is displayed in the center of the screen. The formula appears dynamically, with each variable ""\(C_t\)"", ""\(r\)"", ""\(t\)"" labeled in different colors. Pop - up tags explain in detail: ""**\(C_t\)**: Cash flows at time \( t \) (positive for inflows, negative for outflows)"", ""**\(r\)**: Money - weighted return"", ""**\(t\)**: Time period"". Below, an icon of a simple financial calculator and an interface of relevant software are shown, indicating that tools can be used for calculation|(Voice - over, meticulous and systematic) ""Here's the formula for calculating MWR. \(C_t\) represents the cash flows at each time period, whether it's capital you invest (a negative value) or funds you receive back (a positive value). \(r\) is the Money - Weighted Return we're attempting to determine, and \(t\) is the time. The objective is to find the \(r\) that makes the net present value of all these cash flows equal to zero. Although the mathematics can be intricate, financial calculators and software simplify the computation significantly.""| |4|1:30 - 2:15|The scene transitions to a step - by - step MWR calculation example. The background is a sheet of graph paper. First, a series of simulated cash flow data is presented, such as \(C_0 = - 1000\) (initial investment), \(C_1 = 200\) (income in the first period), \(C_2 = 1300\) (income in the second period and principal repayment). Then, an animation demonstrates substituting the data into the formula, showing the step - by - step calculation process. Meanwhile, a ""NPV = 0"" target prompt is displayed beside it. Finally, the calculated MWR value is shown, highlighted in red|(Voice - over, slow and guiding) ""Let's work through an example. Suppose you initially invest $1000, then receive $200 after the first period and $1300 at the end of the second period. By plugging these values into the formula and using a financial calculator or software, we can find the Money - Weighted Return that makes the net present value zero. This final rate tells you the actual return on your investment, taking all these cash movements into account.""| |5|2:15 - 2:45|The scene fades out and switches to a new interface. On the left, a title ""Time - Weighted Return (TWR)"" and a definition text box appear: ""The Time - Weighted Return (TWR) measures the compound growth rate of an investment portfolio, removing the impact of cash flows. It is designed to evaluate the performance of the investment manager, independent of the timing and size of deposits or withdrawals by investors."" On the right, an animation plays, showing the growth curve of an investment portfolio's value over different time periods, regardless of the investor's deposit and withdrawal operations|(Voice - over, clear and distinct) ""Now, let's turn to the Time - Weighted Return. TWR focuses on the growth of the investment portfolio itself, disregarding the effects of cash flows. It's an excellent way to assess how well an investment manager performs, as it reflects the performance of the underlying investments without being swayed by when investors add or remove funds.""| |6|2:45 - 3:30|The calculation steps and formulas for TWR are displayed step by step in the center of the screen. First, the first step ""Break down the total period into sub - periods"" is shown, with a timeline animation dividing the total investment period into multiple sub - intervals based on cash flow nodes. Then, the formula for the second step \[ R_i = \frac{(V_{i + 1} - V_i+CF_i)}{V_i} \] is presented. Each variable ""\(R_i\)"", ""\(V_i\)"", ""\(V_{i + 1}\)"", ""\(CF_i\)"" is labeled in different colors, and pop - up tags explain: ""**\(R_i\)**: Return for period \( i \)"", ""**\(V_i\)**: Portfolio value at the beginning of period \( i \)"", ""**\(V_{i + 1}\)**: Portfolio value at the end of period \( i \)"", ""**\(CF_i\)**: Cash flows during period \( i \)"". An animation demonstrates how to calculate the return within one sub - period. Finally, the formula for the third step \[ (1 + TWR)=(1 + R_1)\times(1 + R_2)\times...\times(1 + R_n) \] is shown, with a dynamic multiplication animation illustrating how to multiply the returns of each sub - period to obtain the TWR|(Voice - over, detailed and logical) ""Calculating TWR involves several steps. First, we split the entire investment period into smaller sub - periods based on cash flow events. Then, for each sub - period, we use the formula to calculate the return, which considers the portfolio's starting value, ending value, and any cash flows during that period. Finally, we multiply the returns of all these sub - periods together to get the overall Time - Weighted Return. This approach provides us with a clear picture of the portfolio's growth rate, isolated from the impacts of cash flows.""| |7|3:30 - 4:15|A comparison table titled ""Key Differences"" is displayed on the screen. The table has three columns: ""Aspect"", ""Money - Weighted Return (MWR)"", ""Time - Weighted Return (TWR)"", with rows corresponding to different comparison aspects, such as ""Cash Flow Sensitivity"", ""Purpose"", ""Calculation Complexity"", ""Impact of Contributions"". The content of each row appears one by one in an animated manner, accompanied by a voice - over explaining the differences. For example, in the ""Cash Flow Sensitivity"" row, the MWR column shows ""Highly sensitive to the timing and size of cash flows"", and the TWR column shows ""Insensitive; focuses solely on investment performance"", with comparison arrows and emphasis effects|(Voice - over, contrasting and highlighting key points) ""Now, let's compare these two metrics side by side. MWR is highly sensitive to cash flows; a large investment just before a market upswing can significantly boost the return. In contrast, TWR completely ignores cash flows, making it ideal for evaluating an investment manager's proficiency. Calculating MWR can be complex, as it requires solving for the IRR, while TWR is a more straightforward process of chaining sub - period returns. Moreover, contributions and withdrawals have a substantial impact on MWR but no impact on TWR at all.""| |8|4:15 - 5:00|Animated real - world investment scenarios are shown on the screen. The left - hand scene demonstrates the MWR situation: an investor makes a large additional investment just before the market starts to rise, and then as the market goes up, the value of the investment portfolio surges, and the MWR value increases significantly, with a label beside it reading ""MWR reflects the investor's timing - influenced return"". The right - hand scene demonstrates the TWR situation: the investment manager allocates assets rationally, and the investment portfolio grows steadily. During this period, the investor makes several deposit and withdrawal operations, but the TWR still accurately reflects the growth performance of the investment portfolio itself, with a label beside it reading ""TWR highlights the manager's performance, unaffected by cash flows"". At the bottom of the screen, a text summary appears: ""Understanding these two methods is essential for evaluating investment performance and making informed investment decisions.""|(Voice - over, summarizing and emphasizing practical applications) ""To see these metrics in practice, consider this example. With MWR, an investor's fortuitous timing of a large investment can inflate the return figure. But TWR looks beyond these cash flow events and reveals the true growth of the investments under the manager's stewardship. By understanding both MWR and TWR, you can make more informed investment decisions and accurately assess performance.""| |9|5:00 - 5:30|The scene gradually fades into the closing interface, with a tranquil background of a financial library scene, where bookshelves are filled with investment - related books. In the center of the screen, the text ""Thank you for watching! Dive deeper into investment analytics with our upcoming videos."" is displayed. Below the text, links to relevant learning resources and a list of recommended books appear|(Voice - over, friendly and encouraging) ""That wraps up our exploration of Money - Weighted and Time - Weighted Returns. Keep these concepts in mind when analyzing your investments. Don't forget to check out our additional resources for more in - depth learning. Until next time, happy investing and analyzing!""| "