Overview
Active Return measures how much a portfolio has outperformed or underperformed its benchmark. It is visible in the Performance tab, which is only available when a benchmark is applied. The tab allows you to toggle between Arithmetic and Geometric methods for calculating Active Return. Arithmetic is the default method.
Arithmetic Active Return
The simple difference between portfolio return and benchmark return
Formula: Portfolio Return − Benchmark Return
Geometric Active Return
Accounts for compounding by measuring the portfolio's return relative to the benchmark multiplicatively.
Formula: [(1 + Portfolio Return) / (1 + Benchmark Return)] − 1
Note: Changing the dropdown to Geometric only affects the Active Return displayed on the Performance chart. No other metrics or values elsewhere in the product are impacted.