NISM-Series V-A: Mutual Fund Certification Exam Notes
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Alpha - Non-index schemes too would have a level of return, which is in line with its higher or lower beta as compared to the market. Let us call this the optimal return.
The difference between a scheme's actual return and its optimal return is its Alpha?a measure of the fund manager's performance.
Positive alpha is indicative of outperformance by the fund manager; negative alpha indicate under-performance
The Beta of the market, by definition is 1.
An index fund mirrors the index. Therefore, the index fund too would have a Beta of 1, and it ought to earn the same return as the market.
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