The meaning of Tereno performance index: the excess return of risky assets per unit system (exceeding the risk-free interest rate Rf).
The bigger the Tereno performance index, the better the fund performance; On the contrary, the worse the fund performance.
Performance is usually judged by comparing the Treno ratio with the market average. Tereno believes that fund managers should eliminate all non-systematic risks through their portfolios, so Tereno uses the excess rate of return obtained by the unit system risk coefficient to measure the performance of investment funds. A sufficiently diversified portfolio has no unsystematic risks, only systematic risks different from market changes. Therefore, he used the βp coefficient of fund investment return rate as an index to measure risk.
Treno indicator is somewhat similar to Sharp ratio, but the difference is that Treno indicator uses beta value to measure volatility, and the formula is: (total return-risk-free return)/portfolio beta value.