3 min read.Updated: 30 Nov 2021, 06:18 AM ISTJoydeep Sen
Rolling returns capture the market events, volatility and skills of fund managers
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There is not only a fervent debate between active and passive fund management, there is a conscious shift happening in favour of passive. For valid reasons, investors prefer to save on the fund management expenses, particularly if outperformance against benchmark is not happening in active funds. Having said that, let us look at it in perspective. The usual way performance is measured, to compare actively managed funds with benchmark, is point-to-point (P2P) returns over time periods like 1 year, 3 years, 5 years, etc. Over these time periods, the returns delivered by an actively managed fund is compared with the total return index (TRI) benchmark. The outperformance or underperformance is easy to make out, which is given by the return differential. However, there is another angle to it.