Relative Return

Relative Return measures the performance of an investment compared to a benchmark index or a peer group over the same time period, rather than the absolute gain or loss in isolation. For example, if a mutual fund returns 12% while its benchmark Nifty 50 returns 10%, the fund's relative return is +2%. Relative returns are the primary metric used to evaluate active fund managers' ability to generate Alpha—excess returns above the benchmark. A consistent positive relative return over multiple market cycles reflects genuine investment skill.