Appraisal Ratio

Appraisal ratio - An appraisal ratio is a ratio used to study a mutual funds managers performance with the mutual funds investments that he chooses. They higher the ratio, the better the performance of the manager. The job of the mutual funds manager is to pick the investments that will do better than benchmark performance of the mutual funds in the basket or do better than the market in general. What is compared is the funds adjusted return of fund assuming the market is at zero (alpha) to the residual standard deviation, which is the difference between the predicted values and the actual values observed, or the portfolio?s unsystematic risks.