Appraisal Ratio
A ratio used to measure the quality of a fund's investment picking ability. It compares the fund's alpha (or the adjusted return of the fund assuming the market return is zero) to the portfolio's unsystematic risk or residual standard deviation.
Investopedia Says:
By selecting a basket of investments, the managers of an active investment fund attempt to beat the returns of a relevant benchmark or of the overall market. The appraisal ratio measures the managers' performance by comparing the return of their stock picks to the specific risk of those selections. The higher the ratio, the better the performance of the manager in question. Related Terms:
Alpha
Analyst
Appraisal
Benchmark
Beta
Fund Manager
Standard Deviation
Unsystematic Risk |