Related to Active return

Portfolio (finance)In finance, a portfolio is a collection of investments. DefinitionThe term "portfolio" refers to any combination of financial assets such as stocks, bonds and cash. Portfolios may be held by individual investors or managed by financial professionals, hedge funds, banks and other financial institutions. It is a generally accepted principle that a portfolio is designed according to the investor's risk tolerance, time frame and investment objectives.

Asset allocationInvestment strategy Example investment portfolio with a diverse asset allocation Asset allocation is the implementation of an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals and investment time frame. The focus is on the characteristics of the overall portfolio. Such a strategy contrasts with an approach that focuses on individual assets.

Performance attributionPerformance attribution, or investment performance attribution is a set of techniques that performance analysts use to explain why a portfolio's performance differed from the benchmark. This difference between the portfolio return and the benchmark return is known as the active return. The active return is the component of a portfolio's performance that arises from the fact that the portfolio is actively managed.

Market portfolioMarket portfolio is an investment portfolio that theoretically consisting of a weighted sum of every asset in the market, with weights in the proportions that they exist in the market, with the necessary assumption that these assets are infinitely divisible. The concept is related to asset allocation and has been critiqued by some economists.

Capital asset pricing modelIn finance, the capital asset pricing model (CAPM) is a model used to determine a theoretically appropriate required rate of return of an asset, to make decisions about adding assets to a well-diversified portfolio.

Passive managementMarket-weighted investing strategy Passive management (also called passive investing) is an investing strategy that tracks a market-weighted index or portfolio. Passive management is most common on the equity market, where index funds track a stock market index, but it is becoming more common in other investment types, including bonds, commodities and hedge funds. There has been a substantial increase in passive investing over the last twenty years.

Portfolio managerA portfolio manager (PM) is a professional responsible for making investment decisions and carrying out investment activities on behalf of vested individuals or institutions. Clients invest their money for future growth, such as a retirement fund, endowment fund, or education fund.

Active managementActive management (also called active investing) is an approach to investing. In an actively managed portfolio of investments, the investor selects the investments that make up the portfolio. Active management is often compared to passive management or index investing. Passively managed funds consistently outperform actively managed funds.

Linear regressionIn statistics, linear regression is a model that estimates the relationship between a scalar response (dependent variable) and one or more explanatory variables (regressor or independent variable) related via a linear combination. A linear model with exactly one explanatory variable is a simple linear regression; a model with two or more explanatory variables is a multiple linear regression.

Tracking errorIn finance, tracking error or active risk is a measure of the risk in an investment portfolio that is due to active management decisions made by the portfolio manager; it indicates how closely a portfolio follows the index to which it is benchmarked. The best measure is the standard deviation of the difference between the portfolio and index returns. Many portfolios are managed to a benchmark, typically an index.

FinanceFinance refers to the management, movement, investment, and raising of money. "Finance" also refers to the academic discipline that studies these. Based on the scope of financial activities, the discipline can be divided into the three primary branches personal, corporate, and public finance.

Zero-sum gameZero-sum game is a mathematical representation in game theory and economic theory of a situation that involves two competing entities, where the result is an advantage for one side and an equivalent loss for the other. In other words, player one's gain is equivalent to player two's loss, with the result that the net improvement in benefit of the game is zero. If the total gains of the participants are added up, and the total losses are subtracted, they will sum to zero.