Alpha is one of the most famous performance metrics, but its interpretation can be tricky. To earn a positive alpha, a portfolio can either return more than a benchmark, or it can sustain lower volatility. Therefore, it's not very helpful to look at alpha in isolation. We use separate metrics for return and risk. We're primarily focused on what we call 'Value Add,' which we measure simply as the performance of a portfolio in excess of its benchmark. As for risk, we look at the reduction in volatility, but other metrics work, such as beta.
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