Understanding Time-Weighted Rate of Return (TWRR)

In the context of performance measurement in alternative investments, understanding how to assess the returns generated by various types of assets is crucial for investors. One key method used to measure and evaluate investment performance is the Time-Weighted Rate of Return (TWRR). This method is particularly useful as it accounts for the effects of cash inflows and outflows during the investment period.

Which of the following statements best describes the primary advantage of using the Time-Weighted Rate of Return over other performance measurement methods?