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With the advance of technology, most systems can calculate a true time-weighted return by calculating a daily return and geometrically linking in order to get a monthly, quarterly, annual or any other period return. However, the modified Dietz method remains useful for performance attribution, because it still has the advantage of allowing modified Dietz returns on assets to be combined with weights in a portfolio, calculated according to average invested capital, and the weighted average gives the modified Dietz return on the portfolio. Time weighted returns do not allow this.
This method for return calculation is used in modern portfolio management. It is one of the methodologies of calculating returns recommended by the Investment Performance Council (IPC) as part of their Global Investment Performance Standards (GIPS). The GIPS are intended to provide consistency to the way portfolio returns are calculated internationally.<ref>{{cite web|title=Global Investment Performance Standards (GIPS®) Guidance Statement on Calculation Methodology|url=http://www.gipsstandards.org/standards/guidance/documents/develop/calcmethod.
The method is named after Peter O. Dietz.<ref>{{cite book
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His approximation was therefore to generate money weighted rates of return for the period. Because there is a GIPS requirement to produce a valuation on a monthly basis at least, using modified Dietz with monthly valuations provides a series of individual monthly money-weighted rates with which can be compounded together to produce a good quality approximation for the longer time period time weighted rate of return<ref>{{Cite journal|last=Dietz|first=Peter|date=May 1968|title=Measurement of Performance of Security Portfolios
COMPONENTS OF A MEASUREMENT MODEL: RATE OF RETURN, RISK, AND TIMING
==Formula==
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