Relative Return
Relative return compares the performance of an investment against a benchmark, such as a market index. It provides insight into how well an investment or fund manager performs relative to the broader market or similar assets. Relative return is critical for investors who want to evaluate whether active management strategies or fund performance are adding value beyond what could be achieved with passive investments.
Key Takeaways
- Measures investment performance against a benchmark.
- Used to assess fund manager performance.
- Common in active vs. passive investment strategy evaluations.
- Helps determine added value beyond market returns.
