What is the Treno index?
The Treynor index is an indicator for investors to judge whether the risks taken by fund managers in the process of managing funds are beneficial to investors, and it is the risk premium of unit risk. Generally expressed by TR.
The formula of Treynor index is: t = (RP-RF)/β p; In this formula, T represents Tereno's performance index, RF represents the average risk-free interest rate of the fund during the investigation period, RP represents the average return rate of the fund during the investment investigation period, and βp represents the systemic risk of the fund. After calculating the index results, the bigger the Treeno index, the higher the unit risk premium, the better the performance of open-end funds, and the risks taken by fund managers in the management process are conducive to investors' profits. On the contrary, if the calculation results show that the Treynor index is small, it means that the unit risk premium is low, and the worse the performance of open-end funds, the risks that fund managers take in the process of investing in funds are not conducive to investors' profits. Trino index is an index to measure the excess return per unit risk. The meaning of excess return is that in Tereno index, excess return is the difference between the investment return rate of the fund and the risk-free return rate in the same period. Tereno performance index means the excess return of risky assets in the unit system (exceeding the risk-free interest rate Rf). The relationship between Tereno performance and excess returns is as follows: The bigger Tereno performance index, the better the fund performance; On the contrary, the worse the fund performance.
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The role of Trelawney index
Treno index is suitable for evaluating funds with completely dispersed non-systematic risks, and large-cap index funds are this form of funds. Understanding and implementing the knowledge of Treynor index and Zhan Sen index into fund products is to pursue the maximization of income through active management, thus creating the maximization of excess income of fund investment. Only by defeating the market benchmark portfolio to obtain excess returns is the best interpretation and the highest realm of financial management, which is suitable for investors to better grasp the stock market and pursue greater interests for themselves!