When evaluating the performance of a mutual fund manager, one should use the dollar-weighted return method.

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The dollar-weighted return method, which accounts for the timing and size of cash flows into and out of the fund, is more reflective of the individual investor's actual experience rather than the mutual fund manager's performance. To evaluate a mutual fund manager's performance, the time-weighted return method is more appropriate as it eliminates the effects of cash flows and focuses solely on the manager's investment decisions.

When Evaluating the Performance of a Mutual Fund Manager, One