One of the biggest debates in the investing community is whether the average investor should look for alpha or beta results from his or her portfolio.
What’s the difference? Let’s take a look at each investment style and then you can decide which one best fits your needs.
The Alpha Investor
You’ll often hear active investors refer to their “alpha.” This is basically the amount by which they have exceeded (or underperformed) their benchmark index. For instance, if you invest primarily in US stocks, you might use the S&P 500 index as your benchmark.