Alpha Definition
Learn the definition of alpha and other ETF terminology from the etf.com glossary.
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Learn more about Alpha
In investing, alpha represents the excess return of an investment or a portfolio over its expected or required rate of return, given its level of risk as measured by a benchmark. A positive alpha indicates that the investment performed better than its beta predicts, while a negative alpha indicates that it underperformed. Alpha is a key metric for evaluating the performance of actively managed ETFs, as it measures the manager's ability to add value to the portfolio.
Related terms
Beta, Smart Beta, ETF, Benchmark, Active Management
