How can alpha be treated as performance index as well as risk index?
1 Answer(s)
Satya
Hi,
Please note that alpha denotes the excess return over the benchmark return. The more the alpha, better is the fund. Alpha is attributed to the skills and expertise of the fund manager. If we choose an incompetent fund manager, he may not deliver returns in excess of the benchmark, this is referred as the alpha risk. I hope this is clear to you now. Do get back for more clarifications.
Jan 18 2013 01:53 AM
Please note that alpha denotes the excess return over the benchmark return. The more the alpha, better is the fund. Alpha is attributed to the skills and expertise of the fund manager. If we choose an incompetent fund manager, he may not deliver returns in excess of the benchmark, this is referred as the alpha risk. I hope this is clear to you now. Do get back for more clarifications.