In general I consider myself a relatively maths-literate person, but I'm really struggling to understand TWRR (Time-Weighted Rate of Return); at least as my investment provider is presenting it to me.
I've been investing in an investment account for two years now. It's a fully managed portfolio, I have no direct input into where the money is invested. Each month I invest a fixed amount of money (£100) on a fixed date/schedule, following the pound cost averaging principle. I have never withdrawn from this account (the only outflows of money are the management fees).
On my account dashboard, the provider shows the total amount of money invested as £2400, which makes sense. They also show the total amount currently in the plan as £2300, which makes sense (these are investments so they can lose money as well as gain, and the market isn't doing too well at the moment), and they show the overall gain ("all time") as -£100, which makes sense too.
However, the TWRR figure (for "all time") is shown as a positive percentage, around 3%.
How can this make any sense? I think I get that the point of the TWRR is to adjust for inflows and outflows of money to provide a more representative overall 'interest rate'. However, in this case there have been no outflows and the overall portfolio has fallen - so shouldn't the overall TWRR resolve to a negative figure, since my investments have fallen? Have they calculated it correctly?
Isn't this very misleading? This looks like a positive picture, but of course it isn't, because I've lost money (which is fine, again, it's the stock market, I'm just looking to understand the situation).
(In case it's important - I doubt it is - this is a UK Stocks and Shares ISA account)
(Some of the numbers above simplified for privacy and clarity)