Risk-adjusted return

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Risk-adjusted return

Often we subtract from the rate of return on an asset a rate of return from another asset that has similar risk. This gives an abnormal rate of return that shows how the asset performed over and above a benchmark asset with the same risk. We can also use the beta of the asset multiplied by the benchmark return to create a hypothetical asset that has the same risk characteristics. The difference between the asset return and the beta times the benchmark is the risk adjusted return and is also known as the alpha.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Risk-Adjusted Return

The return on an asset or investment relative to the return on assets and investments with similar risk. The risk-adjusted return can help an investor determine whether he/she is extracting the highest possible return for the least possible risk. One way to calculate the risk-adjusted return is to take the Sharpe ratio.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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Faysal Income & Growth Fund (FIGF) is to provide superior long-term risk adjusted returns by investing in a diverse pool of fixed income securities, including money market instruments; in particular, the aim is to minimize interest rate risk through duration management and default risk through portfolio diversification.
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The investments of this fund are continually monitored, reviewed as well as rebalanced to ensure the best risk adjusted returns.
NET de GERRERS is focused on cross sector investments in real assets, with specialist industry expertise, and active and best practice operational management to achieve superior risk adjusted returns for the investors, a press statement released after the event said.
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Thus individual equity and fixed income selection is likely to yield more control and better risk adjusted returns in a future of secular rising interest rates.

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