The money-weighted rate of return is most affected by the timing of cash flows into or out of the portfolio. If funds are added just before a market downturn, this measure will place greater weight on the subsequent poor performance, thereby depressing the return. In contrast, the time-weighted return neutralizes the impact of cash flows, making it the preferred measure for evaluating portfolio managers. The arithmetic mean return does not account for the timing or magnitude of cash flows, rendering it insensitive to such additions or withdrawals.