Multimanager terms IFAs need to know...

Alpha A measure of selection risk - also known as residual risk - of a trading investment fund. A positive alpha is the extra return awarded to the investor for taking a risk, instead of accepting the market return. An alpha of 0.4, for example, means the fund outperformed the estimated market return by 0.4%. An alpha of -0.6 means a fund's monthly return was 0.6% less than would have been predicted from the change in the market alone. Beta The measure of systematic risk for a fund or stock, which cannot be diversified in relation to the general conditions of the market. A beta of 0.7 me...