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What is Weighted Return?

Weighted Return is a way of evaluating the returns of your holdings as a percentage of your portfolio. Essentially, Weighted Return places more importance on the returns of your largest holdings than your smaller holdings, even if the smaller holdings have a greater absolute return. For example, take a look at the hypothetical $10,000 portfolio below with fictional 1 day returns:

$8,000 of AMZN +1.1%
$1,000 of FB +2.2%
$1,000 of TWTR +1.9%

If we sorted these positions by Weighted Return, AMZN would be at the top because its return had the greatest impact on the overall portfolio being that it represents 80% of the entire portfolio. Even though FB and TWTR had greater absolute returns on the day, they did not impact the overall portfolio return as much as AMZN.


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