Active Return

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Active Return

Return relative to a benchmark. If a portfolio's return is 5%, and the benchmark's return is 3%, then the portfolio's active return is 2%.

Active Return

The actual return on an investment relative to some benchmark. The active return can be either positive or negative; for example, if the actual return is 5% and the benchmark is 6%, the active return is -1%. More broadly, the active return may be the difference between an investment or portfolio and some index against which it is measured. If a portfolio outperforms the market, it may be said to have a positive active return. See also: Required rate of return.
References in periodicals archive ?
Free games and activities for children this summer A popular play week designed to keep children busy and active returns this year.
"Despite the financial impact of the three major hurricanes, the active returns helped offset the losses to deliver a net positive return [to investors]," he said.
Instead, the report authors believe "the lit match taken to active returns last quarter was likely the massive reversal - by the market, by sectors, by styles and by stocks - occurring within the quarter."
Solid active returns in growth equity are available from a number of managers.
Global asset manager Russell Investments has launched a new broad emerging markets fund that aims to provide investors with greater access to opportunities in small cap and frontier markets for significant active returns.
Yet sophisticated investors are, to a large extent, sidelined by their mandates to maximize active returns subject to benchmark tracking error." Benchmarking, in effect, is a limit on the ability to arbitrage this persistent anomaly out of existence.
The standard deviation of the active returns will be applied to the most recent 12 rolling returns observations as of the study's evaluation date for all three returns computation periods.
However, notwithstanding the fund's high cost of active portfolio management (high standard deviation of active returns), its consistent industry-best figures for active returns across the 3 returns horizons result in high information ratios for Coconut Fixed Income Fund.
Here [TE.sub.p] is the tracking error of the portfolio, T is the number of the overall periods, [e.sub.t] is the active return of the portfolio in t, [[mu].sub.e] is the arithmetic mean of the active returns e, and M is the factor for periods less than a year.
alsharkasa@alfred.edu Table 1 Comparison of absolute and active returns Portfolio Absolute Return of the Active Return Return Benchmark Portfolio A -5% -10% +5% Portfolio B 3% +7% -4% Table 2 Hedge fund categories: December 1997 Mean and standard deviation of returns (1990-1997) 1990-1997 Category Number Assets Mean return (US$ billions) (%) Event driven 120 8.6 18.9 Global 334 30.9 17.7 Macro 61 29.8 28.1 Market neutral 201 18.0 8.6 Sectors 40 1.8 29.6 Short sales 12 0.5 7.0 Long only 15 0.4 27.3 1990-1997 Category Standard Risk- deviation adjusted (%) returns Event driven 5.9 3.2 Global 9.4 1.9 Macro 16.3 1.7 Market neutral 2.1 4.1 Sectors 15.9 1.9 Short sales 15.2 0.5 Long only 15.4 1.8 Source: Eichengreen, B.
Publishing bulletins and yearbooks, organising lectures, concerts and tours, and most recently help for the Czech music institutions hit by the floods--all of this is part of the packed agenda of a friend to whom we wish many happy and active returns!
(1) If the hurdle variable is the return on a prespecified normal portfolio defining the investment objective of the fund (benchmark), the performance fee is a percentage of the fund's active return. If the hurdle variable is a proxy of the risk-free rate (an interbank interest rate or a return on an index of treasury bills), the performance fee is a percentage of the fund's excess return.

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