Mutual funds: Know the role of alpha & beta in MF returns
By Parthajit Kayal and Malvika Saraf
Alpha and beta are two popular words used in the investment arena. However amateur retail investors may not have much familiarity with these terms. In this article, we would explain what are alpha and beta and how they are used to evaluate funds.
Alpha and beta are two statistical measures that are popularly used to evaluate the performance of an individual stock, mutual funds, or investment portfolios, and thereby generate superior returns.
What is alpha? In mutual funds, alpha is a crucial barometer. Understanding alpha helps in understanding the soundness of one’s investments in a scheme. Typically, a scheme has an index against which its composition is benchmarked. For instance, a large-cap scheme could
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