Forecast return is the rate of return on an asset for a future time period measured using mathematical techniques. Only an active manager calculates forecast return, as it is used to determine if an asset is cheap or expensive. The active manager subtracts expected return from forecast return to create a buy or sell signal, or alpha signal.
Synonym: anticipated return
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Pam: We're so grateful you separated out
historical, expected and
forecast return .
Guy: No problem. We just needed words to express past, present and future. Financial Engineering 101.
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