Upside Capture Ratio measures how much of a market rally a fund captures — 110% means the fund outperformed the benchmark by 10% in rising markets.
Upside Capture Ratio = Fund's average return in benchmark-positive months ÷ Benchmark's average return in those same months × 100. A ratio above 100% means the fund gains more than the benchmark in bull markets. A ratio below 100% means it captures less of the upside. Ideally, you want a fund with a high Upside Capture Ratio AND a low Downside Capture Ratio — it rises more than the index and falls less. That combination is the holy grail of active management.
If the market goes up 10% in a given month, and your fund goes up 12%, the upside capture is 120% (it captured 120% of the market's upside). If the market goes up 10% but your fund only goes up 8%, upside capture is 80%. You want upside capture to be high (above 100%) — meaning the fund amplifies bull market gains.
Identify all months where the benchmark had a positive return.
Calculate fund's average return in those months.
Upside Capture = Fund's average ÷ Benchmark's average × 100.
Compare alongside Downside Capture Ratio for the full picture.