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Financial glossary

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Alpha

Alpha is an indicator used to measure the value added by an active portfolio manager relative to a passive exposure to a benchmark. A positive alpha expresses an outperformance whereas a negative alpha indicates an underperformance. A simple way to calculate alpha is to compare the excess return of a fund with the benchmark index’s return. The difference is the fund’s alpha.

Asset allocation 

is an investment strategy that seeks to balance the risk and rewards from investing. It entails adjusting the amount (or percentage) of money that is invested in different asset classes such as stocks, bonds, cash. This adjustment will depend on an investor’s tolerance for risk, their particular goals and investment time frame.