What alpha tells you
Alpha (Jensen's alpha) isolates the part of a fund's return that came from manager skill rather than market movement. It answers: "Given how much market risk this fund took (its beta), did it beat what the benchmark would have produced?"
An alpha of +2% means the fund delivered about 2 percentage points a year more than expected for its risk. An alpha of -1.5% means it trailed.
How to read it
- Compare alpha only within the same category, against the same benchmark.
- A high alpha on a thin track record is fragile, not skill.
- Active funds charge for the chance at positive alpha; many don't deliver it net of fees (cost calculator).
How FindMF computes it
We align the fund's month-end returns (from AMFI NAVs) with its category benchmark's monthly returns, requiring at least 24 overlapping months, and run a regression. Alpha is annualised and shown in %. We take no commission; see methodology. Debt and most hybrid schemes show no alpha until a matching benchmark is available.