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.
