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==Comparison with time-weighted return and internal rate of return==
The modified Dietz method has the practical advantage over the [[true time-weighted rate of return]] method, in that the calculation of a modified Dietz return does not require portfolio valuations at each point in time whenever an external flow occurs. The [[internal rate of return]] method shares this practical advantage with the modified Dietz method.
Conversely, if there exists a portfolio valuation at any point in time, the implied modified Dietz valuation of cashflows at that point in time is quite unlikely to agree with the actual valuation.
With the advance of technology, most systems can calculate a 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.
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