Relative returns measure investment success by comparing how their groups of funds perform in comparison to a stock index. Absolute return investorswe know them as hedge fund investorsmeasure success by how much their investments make or lose, regardless of traditional stock indexes.

Lets 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 Jacquelines boyfriend, most of Jacquelines 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 hasnt done so well.

The absolute return index combines absolute investing with relative investing. Absolute investors want to know how theyre 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.

finance a la shmoop what are lenders is that a bagel company hmm okay well maybe

it doesnt 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 theyre

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 Brothers long does not just get

naturally forgotten his alone carries interest in newgy penalties when its [fist appears as sister smiles]

not paid back to lenders its people who loan money lending loaning got in there

What is Relative Return? Also referred to as alpha, relative return is return on investment (most often a mutual fund or ETF) that generates relati…

What are Return on Equity and Return on Assets? Return on equity is a percentage that is found by dividing net income by shareholders equity. It…

What is real return? Real return is the actual return made from an investment after inflation is factored in. Return is expressed as a percentage c…

When you buy and sell something for investment purposes, whether it be a stock, artwork, gemstones, a bond, a condominium, you know that once you h…

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