Glossary term
Alpha
Return that comes from a strategy's edge, not just from broad market exposure.
Alpha is the part of a portfolio's return that cannot be explained by simply owning the market or another benchmark. In plain English: it is the value added by the strategy's selection, timing, or risk management process.
Example: If the market rises 8% and a hedged stock-selection strategy earns 5% with little market exposure, that 5% is mostly alpha.