™If a stated risk-adjusted model requires a 10% return and a fund earns 12%, its estimated alpha under that model is 2 percentage points, before checking fees and statistical uncertainty.
Risk & Portfolio
Alpha
Return above or below what a chosen benchmark or risk model would imply.
Plain-English context
Put the definition to work.
Simple benchmark outperformance is not necessarily risk-adjusted skill. Specify the model, period, costs and estimation uncertainty.
Further reading and verification. Examples are hypothetical, not current quotes or recommendations. Product terms, tax treatment and market rules can change. Investor.gov — asset allocation and diversification