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Financial Literacy

Financial Literacy

Home Financial Literacy Investing 101 Judging Performance of a Mutual Fund

Judging Performance of a Mutual Fund

Let us introduce you to the Concept of “Alpha”. Greek letters make mundane things just seem.. classier, don’t they? Common parlance for describing good stock picking on Wall Street is “Alpha”. Maybe it’s a nod to Buck from Call of the Wild and Alpha Dogs like Vinny in “Entourage”. Alpha describes how your stock picks performed against a relevant basket of stocks considered to be “the market”. High Alpha means that your portfolio of stocks returned, say 15% in a 2 year period while the market returned only 5%. Something like that anyway.

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