Alpha in mutual funds: did the manager add value?

Alpha measures how much extra return a fund earned compared with its benchmark, after adjusting for the risk it took. It's the closest single number to "did the fund manager add value?"

How to read it

• Positive alpha (e.g. +2%) — the fund beat its benchmark by 2% more than its risk would predict. Good.
• Zero alpha — the fund just matched what the market gave for that level of risk.
• Negative alpha — the fund underperformed for the risk taken; the manager subtracted value.

The catch

Alpha is backward-looking and doesn't persist reliably — a manager with high past alpha won't necessarily repeat it. Index funds, by design, target ~zero alpha at very low cost, which is hard for active funds to beat after fees.

→ See a fund's alpha, and the vs-benchmark NAV chart, on its detail page.