Educational guide
Alpha & Beta in Mutual Funds — Reading Fund Factsheets
Beta tells you how the fund swings with the market. Alpha tells you what the fund manager added after taking out that market swing.
// beta
Beta of 1.0 = moves exactly with the benchmark. > 1.0 = more volatile. < 1.0 = less volatile. Indian large-cap funds typically run 0.85–1.05; mid-cap funds 1.05–1.20.
// alpha
Manager's contribution after adjusting for the beta-driven market return. Computed as: Alpha = Fund Return − [Risk-free + Beta × (Market Return − Risk-free)]. Positive alpha = manager added value; negative = manager destroyed it.
// reading factsheets
AMC factsheets show 3-year Alpha and Beta. Compare them to the right benchmark — a flexi-cap fund vs Nifty 500 TRI, a mid-cap fund vs Nifty Midcap 150 TRI, etc. Wrong benchmark makes the metric meaningless.
// frequently asked questions
Not inherently — a high-beta fund will outperform in a bull market and underperform in a bear market. Match beta to your risk appetite, not absolute levels.