Capture Ratio
The capture ratio helps investors evaluate how well an asset or portfolio performs during both rising and falling markets. The ratio is calculated by comparing the asset's performance to a benchmark index during up and down markets. - Up Market Capture Ratio: Measures how well an asset performs during periods when the market is rising. - Formula: Up Market Capture Ratio = (Returns during market highs / Benchmark returns) * 100. - Down Market Capture Ratio: Measures how well an asset performs when the market is falling. - Formula: Down Market Capture Ratio = (Returns during market lows / Benchmark returns) * 100. These ratios help assess if the asset manager is effectively navigating market volatility.
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