Active return

Description

In finance, active return refers to that segment of the returns in an investment portfolio that is due to active management decisions made by the portfolio manager. It does not include any return that is merely a function of the market’s movement. The active return is calculated as the return of the portfolio minus some benchmark return.

Related formulas

Variables

RaActive return (dimensionless)
RpThe return for the portfolio (dimensionless)
RbThe return for the benchmark (dimensionless)