Definition: Alpha refers to the return of a particular investment strategy compared to a relevant market index or benchmark, or the portfolio’s value in excess of expected market returns. Alpha generation refers to all of the ways portfolio managers try to maximize alpha, usually by diversifying portfolios to reduce unsystematic risk.
Example: Any security or investment that produces alpha without adding excess risk to the portfolio can be considered an alpha generator. Alpha generators are critical because they can deliver higher returns. Alpha generation might include, for example, using algorithmic methods to identify likely alpha generators.
Explore IVP Middle Office Services:
IVP’s Middle Office Services offer a fully scalable and customizable service that allows all kinds of asset managers to significantly improve operational efficiency and transparency. By outsourcing critical middle office processes, firms can focus on core competencies. Our comprehensive suite of middle office services encompasses everything from trade lifecycle management and corporate actions processing to asset lifecycle management.
