What is an alternative beta?
Alternative beta is a term for a certain type of risk that investors face. This sentence is used to indicate the type of investment strategy. Investors who seek to benefit from alternative beta investing and expose themselves to the risk of different markets than those using traditional beta strategies, using different methods than those used by alpha investors. Alpha is the risk of the performance of an individual company. Investors watching Alpha try to choose individual stocks to overcome the market. Beta is a systematic risk or risk of one's own market. Investors looking for Beta profits try to buy and sell assets at profitable times. The exposure of someone's portfolio more risks on the market rather than collecting stocks, but managing that affects the risk brands affects the portfolio is an alternative beta strategy. This includes a selection of the various markets in which you can invest. In this type of investment strategy, however, the same tactics of traditional beta investing are used as the timing of the market.
The definition of alternative beta is vague because different markets are traditional according to different investors. Some investors believe that investing in traditional markets in non -traditional ways, such as pairing debt or investment in capital with derivatives, exposes investors alternative beta. Others limit their definitions to market risks to non -traditional markets that investors can use to diversify their investment. They can be as diverse as developing international markets, fine arts and old wines.
One of the most common contexts that the alternative beta is discussed is the world of investing Hedge funds. The Managers Hanning Fund usually offer their skills by attributing their revenues their skills in the selection of stocks; This means that their results are the result of alpha strategies. Some analysts believe that the supposed alpha investment of hedge funds is in the SCornness with beta type. According to this theory of investment in the Hedge Fund, the investor exposes the risks associated with hedge funds rather than for a particular manager.
Investors decide to promote alternative beta beta because it provides opportunities other than traditional beta or alpha investment. Some prefer beta investment methods over Alfa Investing methods because they think that profits from alpha strategies are too uncertain or happiness. The branching of the traditional beta to the alternative allows investors to diversify their portfolios. They can continue to use methods with which they are comfortable while revealing new opportunities for time markets.