Glossary

Alpha is a measure of an investment's performance relative to a benchmark, like an index, indicating how well a portfolio manager or an investment strategy has outperformed the market. 📈

It's often used to evaluate the skill of active fund managers, as a positive alpha indicates that the investment has outperformed the benchmark, while a negative alpha means it has underperformed.

For example, if a mutual fund has an alpha of +3, it means the fund has outperformed its benchmark by 3% during a specific period.

Fun fact: Alpha is the first letter of the Greek alphabet, and in finance, it symbolises the beginning or the "first mover" advantage. 🏆 This implies that skilled investors who can consistently generate positive alpha are considered to have superior stock-picking or market-timing abilities compared to the average market participant.