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Managed Funds Videos 236 videos

Finance: What is Efficient Markets Theory?
141 Views

What is the Efficient Markets Theory? The Efficient Markets Theory says that stocks trade at their fair value all of the time, assuming all informa...

Finance: What is a Fund of Funds?
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What is a Fund of Funds? A fund of funds is a mutual fund strategy that invests in other funds rather than investing in stocks or bonds. The underl...

Finance: What is Collateralized Mortgage Obligation (CMO)?
65 Views

What is Collateralized Mortgage Obligation (CMO)? A CMO is a mortgage bond that consists of a large number of different individual mortgages bundle...

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Finance: What is a High Alpha Investor? 5 Views


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What is a High Alpha Investor? A high alpha investor invests in securities with alpha values of 1 or higher. This means that the mutual fund or stock has outperformed its benchmark index by 1% or more.

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Transcript

00:00

Finance a la shmoop what is a high alpha investor? alpha dogs you know um fear em, [Arrow points to dogs]

00:10

love em feed em alpha is good okay okay more specifically it's an

00:15

investing term synonymous with smart if you have lots of alpha then you are

00:20

smarter than the market so a high alpha investor is someone who beats the market

00:25

while taking low risk ie not a lot of leverage not super volatile

00:31

stocks per se or crazy categories like crypto currencies and they didn't just

00:35

go by 20 bucks of California lottery tickets and then win alpha is well

00:40

kind of a newish term in Modern Portfolio theory which is a thing [Modern Portfolio Theory book appears]

00:44

apparently that signifies that this fund manager or mutual fund is pretty awesome

00:49

and we can quantify that awesomeness with a number which we call alpha well

00:54

what does this number mean? well a 2 indicates that the fund or investment

00:58

performed at 2 percent better than the benchmark index and minus 7 is a 7 percent

01:03

in the wrong direction and stuff like that and as we all know an alpha dog [Dog chewing a bone]

01:06

will eat numbers like that for breakfast so high alpha good low alpha bad

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