Returns & Performance

Alpha

Definition

What is Alpha?

The return attributed to investment skill after adjusting for benchmark performance or market risk.

Example in practice

A fund that returns more than its risk-adjusted benchmark may be described as generating positive alpha.

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The complete investment result from price changes plus income, assuming distributions are included.

The profit made when an asset or fund unit is sold for more than its cost.

A payment made from a company's profits to eligible shareholders.

The recurring fee paid from fund assets to the fund manager for managing the portfolio.

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