As my understanding goes:
- XIRR gives a money-weighted return: so time periods in which money is invested have more of an impact on the overall return than equivalent time periods when less money is invested.
- Unitisation gives you a time-weighted return: it tells you the underlying investment performance and strips out the impact of money flowing in & out.
I'm trying to understand how to interpret the numbers: does the higher unitisation % mean that the timing of my investments has had an overall negative impact? I'm also not sure which number to believe - as in, have I achieved a 14% return, or is it actually 8%?
Also, the benchmark I'm using is VWRL (I couldn't find a suitable index, so figured I should at least make sure I was beating an all-world ETF as if not, I should probably just put my money into that instead...) Should I be comparing my XIRR or unitisation number against the benchmark though?