Evaluating Portfolio Performance and Appraisal

ABC Wealth Management is evaluating the performance of its portfolio management team for the past year. The portfolio returned 12% over the year, while the benchmark index (a 60/40 mix of stocks and bonds) returned 8%. Additionally, the risk-free rate during this period was 2%. Using the information provided, discuss the effectiveness of the portfolio management team in terms of performance appraisal. Explain the significance of the excess return and the Sharpe ratio in evaluating their performance.