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,

canadiananalyst

Jose, an easier way to keep M2 in your head

rf + Sharpe Ratio * market deviation

(for those who are remembering-challenged like me)

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

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

Valores

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