The up-market and down-market capture ratios are simple ways to understand how well a fund does when the market goes up or down. These ratios show how well a fund performs during good times (when the market is going up) and bad times (when the market is going down). They help investors see if a fund is good at making money when markets are rising and protecting money when markets are falling.

What is the Up-Market Capture Ratio?

The up-market capture ratio tells you how well a fund performs when the market is going up. It compares the fund's return to how much the market has gained during a rising market. If the ratio is high, it means the fund is doing a good job at making money when the market is growing.

What is the Down-Market Capture Ratio?

The down-market capture ratio tells you how well a fund performs when the market is going down. It compares the fund’s return to how much the market has lost during a falling market. A low down-market capture ratio means the fund is doing a good job at losing less money when the market falls.

How Do You Read These Ratios?

To put it simply, if the up-market capture ratio is more than 100%, it means the fund is doing better than the market during good times. If the down-market capture ratio is less than 100%, it means the fund is losing less than the market when things aren’t going well. A good fund has both a high up-market ratio and a low down-market ratio.

Why Are These Ratios Important?

These ratios help investors see how well a fund can handle different market conditions. If you want to make more money during good market times, look for a fund with a high up-market capture ratio. If you care about not losing too much during market drops, look for a fund with a low down-market capture ratio. Understanding these ratios helps you pick the right fund for your goals.

What Do the Ratios Tell You About the Fund Manager?

If the fund has a high up-market capture and low down-market capture, it means the fund manager is doing a great job at making the most of good markets and limiting losses during bad markets. This shows the fund manager is skilled at managing the fund in all conditions. If the ratios are low, the manager may need to improve how the fund is managed.