Style/Misfit Return vs Active Return

CFA Level III
#1

How do you remember which benchmaks / portfolios are used to calc the style/misfit return vs the active return?

#2

Style return is always the return that you get solely due to the style you have chosen…in such a case, you’d have to compare the return on style benchmark with the benchmark given to the manager. (i.e. this is not a return that you get due to your own effort)

Active return comes about due to your own effort…therefore, you’d have to compare your returns with the style benchmark…

Hope that helped.

#3

for active returns don’t you compare your returns to the portfolio benchmark, not the style benchmark?

#4

Nope. Unless you’re talking about total active return. Same with total active risk.