How is the manager's "true" return calculated?

Calculating the manager's "true" return involves assessing the excess return generated by the manager after accounting for the performance of a relevant benchmark. This approach allows investors to isolate the value added by the manager's investment decisions compared to a standard investment benchmark that reflects the market conditions against which the manager should be evaluated.

In this context, the "true" return is derived by subtracting the manager's normal benchmark return from the manager's actual return. This provides a clearer picture of how much value the manager has contributed beyond what would have been expected based on market performance. By focusing on the difference, investors can better assess the effectiveness of the manager’s strategies and decisions in driving returns.

Using this methodology ensures that the evaluation of a manager's performance is not unduly influenced by broader market conditions but is centered on the manager's skill in generating excess returns above a standard measure. This is critical for investors who want to identify truly skilled managers who can deliver consistent performance over time.