Schweser practice V1 third afternoon, p188 Q25, statement 1 says bond indexed enhanced approach got excess return
I would like to know is excess return equal to active return,
I remember Semi-active approach no active return, anyone can clarify?
the only style that doesn’t generate active return is pure indexing.
as long as the portfolio is even a bit different than the benchmark, it will have active return.
wow, you just keep shooting questions aren’t ya.
so are you saying excess return=active return, I remember excess return is due to alpha management only.
secondly for semi-active, do we have normal benchmark(style index) and investor benchmark(index) also, then in semi-active, the excess return is compared with style index or index? I believe in semi-active, we don’t have true return but has misfit return, correct me if I am wrong
There could be an enhanced index to the R1000G. If so you would have true active return vs. the r1000G and misfit return of R1000G vs. R1000.
The only way to have no true active return if your fund is a style index.