To calculate the total/MV/interest return alpha, we commence by ascertaining the total/MV/interest investment return for each entire period, such as from a deal’s closing date to the last reporting date. This is accomplished by compounding the portfolio’s monthly (or periodic) total/MV/interest return since the closing date. Subsequently, we annualise the total/MV/interest portfolio return and compare it to the annualised return of the index. The disparity represents the total/MV/interest return alpha depicted here.
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