| Relative Return | |
 The return that an asset achieves over a period of time compared to a benchmark. The relative return is the difference between the absolute return achieved by the asset and the return achieved by the benchmark. |
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 Relative returns are most often used when reviewing the performance of a mutual fund manager. Because holders of mutual funds are charged management fees, they expect a manager to achieve returns higher than the benchmark index. For example, if the fund you are holding achieves an absolute return of 12% over the past year while the benchmark index provides a return of 15%, then the fund has achieved a relative return of -3% for the year. |
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 What's the difference between absolute and relative return? You Can't Judge an Index Fund by Its Cover - Despite appearances, not all funds of this type render the same return. Find out why before you invest! The Truth Behind Mutual Fund Returns - Fund returns can be skewed dramatically by survivorship bias. Learn more so you won't be misled. Introduction To Hedge Funds - Part One - Learn everything you need to know about the characteristics and strategies of hedge funds. |
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