The Modigliani Index is part of a group of indicators called "risk-adjusted performance". As opposed to The Sharpe Index (please see explanation), this index aims to measure and compare the performances of two or more funds with a similar benchmark and therefore the same level of risk. In effect, the volatility of the funds being compared is modified (it is normally aligned to its benchmark’s volatility) and then the generated return is recalculated for the period of observation. The aim is to highlight which fund had better results under the same level of risk.
The Modigliani Index is defined as:

: average return of the fund during the period of observation;
: average return of a risk-free operation;
: standard deviation (risk) of the benchmark;
: standard deviation of the fund.
The greater the value (expressed as a percentage) of the index, the better the fund will perform in comparison to others using the same benchmark.
Editor: Mirko IORI