Down-Market Capture Ratio Defined

Understanding Down-Market Capture Ratio in Investment Performance Evaluation

Investors often rely on various metrics to assess the performance of investment managers, and one such metric is the down-market capture ratio. This article breaks down the concept of down-market capture ratio, its calculation, significance, and practical examples.

Deciphering Down-Market Capture Ratio

The down-market capture ratio serves as a crucial statistical measure in evaluating an investment manager's performance during market downturns. By comparing the manager's returns to those of the index during down-market periods, investors can gauge the manager's ability to mitigate losses relative to the market.

Fact: The down-market capture ratio is calculated by dividing the manager's returns by the returns of the index during down-markets and multiplying the result by 100. (source)

Understanding Market Capture Ratio

Explore the relationship between up-market capture ratio, down-market capture ratio, and market capture ratio. By examining both up-market and down-market performance, investors gain a comprehensive understanding of an investment manager's ability to navigate different market conditions.

Fact: Market capture ratio is calculated by dividing the up-market capture ratio by the down-market capture ratio, providing insights into the manager's overall performance relative to the market. (source)

Analyzing Practical Examples

Dive into practical examples to grasp the implications of different down-market capture ratios and their correlation with up-market performance. Learn how investors interpret these ratios to make informed decisions about investment managers and portfolios.