Relative returns measure investment success by comparing how their groups of funds perform in comparison to a stock index. Absolute return investors—we know them as hedge fund investors—measure success by how much their investments make or lose, regardless of traditional stock indexes.
Let’s compare the two types of investment to dating. Jacqueline is a relative investor. She is dating a semi-handsome man with a low-paying job and little desire to improve. Her man would rate low if evaluated on an absolute basis. Luckily for Jacqueline’s boyfriend, most of Jacqueline’s friends are dating men who have recently been incarcerated. In comparison, or relatively speaking, Jacqueline has got herself quite the hunk. If measured on an absolute scale, however, she hasn’t done so well.
The absolute return index combines absolute investing with relative investing. Absolute investors want to know how they’re doing against other absolute investors. The absolute return index, also called the Hedge Fund Absolute Return Index (HFRX), helps hedge fund investors measure the performance of their funds against a composite of other funds.
Related or Semi-related Video
Finance: What are lenders?27 Views
finance a la shmoop what are lenders is that a bagel company hmm okay well maybe
it doesn't matter here lenders are the people and institutions
and countries who loan money banks are lenders they loan money for small [woman walks into bank]
business for big business and well everything in between
banks are big lenders they generally focus on large amounts for big
corporations and take their spread then you have savings and loans well they're
smaller more intimate local cousins of the banks and they focus on local loans
like your local flower shop needs 25 grand in credit but lenders also sell a [flowers in a store]
special kind of loan a mortgage for when you want to buy a home and the interest
on mortgages is distinctively tax-deductible your big brother can also
be a lender that hundred bucks he loaned you yeah is not like the hundred that [sister approaches big brother]
grandmama quote loaned you unquote ie Big Brother's long does not just get
naturally forgotten his alone carries interest in newgy penalties when it's [fist appears as sister smiles]
not paid back to lenders it's people who loan money lending loaning got in there
kind of related [sister being nuggied]
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