Is below statement correct?
Misfit active return refers to performance of the manager relative to the imperfect benchmark (i.e. a benchmark that is not suitable for the manager’s style). It basically represents returns earned due to stock selection skill of manager.
That statement is incorrect.
Misfit active return is the Managers True benchmark vs whatever the investor/clients benchmark is.
Thanks…it’s from Finquiz note…I feel weird as well.
From the perspective of the manager, the benchmark is not perfect, he wants to make perfect; hence generating active misfit return.
" I used to be arrogant, now am perfect "