I am able to calculate the money-weighted return (XIRR equivalent in Excel) of my portfolio. Whilst I can compare this with ‘headline’ returns of ETF’s, Mutual Funds etc, I want to isolate the timing of my cashflows from my choice of investments. In other words, I want to see if I would have been better making my investment timing decisions and investing in the benchmark rather than investing in my own choice.
The difficulty seems to be that if I apply the same cashflows to benchmark the benchmark itself can be very misrepresentative – for example, if I have outperformed the benchmark, then make a cashflow deduction from my portfolio and try and replicate this in the benchmark (with the same dollar amount) then the benchmark return itself may go negative. Is there a common approach to this?