M2 - How to interpret undermanagement manager, return, figure, interpret

cfa10yrplan

M2

I am struggling to figure out how to interpret M2 – If a manager obtains a return greater than m2 is he underperforming or over-performing?

Many thanks for your help

Regards,

Valores

Better risk adjusted return than the market if m2 is higher than market

justin88

Many thanks for the responses.

However, what would be your answer if the Q says
a) managers' return is 12%
b) M2 is 14%

Did the manager outperformed on risk adjusted basis?


Many thanks

skycfa

ateso Wrote:
-------------------------------------------------------
> Many thanks for the responses.
>
> However, what would be your answer if the Q says
> a) managers' return is 12%
> b) M2 is 14%
>
> Did the manager outperformed on risk adjusted
> basis?
>
>
> Many thanks

M2 is the manager's risk adjusted return, your question isn't worded properly.

NO EXCUSES

canadiananalyst

Jose, an easier way to keep M2 in your head

rf + Sharpe Ratio * market deviation

(for those who are remembering-challenged like me)