Returns Tell You How Much. Capture Ratio Tells You How.
When evaluating a Portfolio Management Service (PMS), looking only at past returns may not tell the complete story. Two strategies may generate similar returns but may have taken very different paths and levels of market participation to achieve them.
This is where Total Capture Ratio becomes useful.
It brings together Upside Capture and Downside Capture, helping investors understand how effectively a PMS participates when markets rise and how it behaves when markets fall.
A favourable capture profile generally indicates that a strategy has been able to participate meaningfully in rising markets while limiting participation in falling markets. This provides an additional perspective on the quality and consistency of returns, rather than focusing only on the final return number.
At PMSInsights.in, our Capture Ratio Calculator helps you analyse and compare the Upside Capture, Downside Capture and Total Capture Ratio of PMS strategies.
Don’t just ask: “What return did the PMS generate?”
Also ask: “How did it generate that return?”
Disclaimer: Past performance and historical ratios are not indicative of future performance. Capture Ratio should be considered along with other risk, return and portfolio parameters.