Risk-Adjusted Performance Evaluation of a Portfolio Manager

In the context of a hypothetical investment firm, consider a portfolio manager who has recently transitioned from a traditional asset allocation strategy to a more aggressive growth-focused approach. The firm reports a 15% return on the portfolio over the past year while the benchmark index, which is a blend of stocks and bonds, has returned 10%. The manager also claims to have intentionally taken on a higher level of risk to achieve this performance.

A recent performance report shows that the portfolio's standard deviation is 18%, compared to the benchmark’s standard deviation of 12%. Furthermore, the beta of the investment portfolio is reported to be 1.5, indicating greater volatility relative to the market.

Your task is to evaluate the portfolio manager's performance using risk-adjusted measures. Discuss the appropriate metrics to assess the manager’s risk-adjusted performance and analyze the implications of the findings.