Batting Average

  

If an investment manager is a baseball player, then their success or failure in beating (or at least meeting) an index is their batting average. The batting average is essentially determined by taking the number of relevant time intervals (days, months, etc.) in which the manager bested or met the index, and dividing it by the total number of that interval for the period in question, then multiplying by 100.

For those who don't keep up with baseball (or investment management trends), high batting average = good; low batting average = not so good.

Let's say it's October 28, 1910 and an investment manager named Tyrus Cobb wants to see their batting average since the beginning of the year (a period of 300 days). Tyrus (we'll call him "Ty" for short) met or beat the index 110 times. So, our calculation is: (110/300)x100= 36.7. With that kind of average, he should have been a baseball player.

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