Alpha
Jensen's Alpha
Risk & PortfolioExcess return of an investment relative to its expected return based on risk (beta). Measures manager skill.
Formula
Alpha = Actual Return - [Rf + β × (Market Return - Rf)]
Why it matters
Positive alpha indicates outperformance vs benchmark. Consistent alpha is rare and valuable. Most active funds fail to generate alpha after fees.
Indian example
Related terms
Learn the concept
Mutual Funds, ETFs, AIFs →From the research
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