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Alpha

Alpha is a technical measure of a fund's risk-adjusted return measuring the value added or not by active management and based on performance against a market index with a similar market risk profile. Most fund's compare themselves to the S&P 500 Index. An alpha of 1.0 means the fund produced a return 1% higher than its beta (market risk) would predict. An alpha of -1.0 means the fund produced a return that is 1% lower than predicted.

 

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