Asset Allocation & Risk

What is alpha (α) in fund performance?

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Alpha measures active performance, i.e., the return achieved above an appropriate benchmark index.

For example, an alpha of 1% means the investment returned 1 percentage point more than the beta-adjusted market return over the same period, and a negative alpha means it returned less. A fund that charges fees must generate alpha greater than its fees to outperform an index fund.

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This answer is general financial information as of 2026-10-14, not investment advice. Rules and tax rates change, so please also check the latest guidance from the source institution.