Alpha is a term used in the financial sector to describe returns that are higher than the index or benchmark.
A mutual fund has a benchmark against which it strives to outperform.
The Sensex or Nifty index will be the benchmark for a large-cap portfolio.
The returns that your mutual fund was able to get above than those of the index are referred to as alpha.
People invest in actively controlled mutual funds mostly for the sake of alpha. Investing in mutual funds makes no sense if there is no alpha.
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