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What is Beta?

Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.


A Beta of 1.5 means that the expected return of the fund is 1.5 times higher than that of the market. For example, if the market has a return of 20% in a particular period, a fund or strategy that has a Beta of 1.5 means that it should generate a profitability of 30% (20% x1,5) in the same period.


Beta is both a performance and risk measure as it predicts both upside and downside moves against the selected benchmark.


The higher the Beta, the greater is the risk of a fund or strategy relative to the market when the market moves downwards, but the higher the reward when the market moves upwards.


The Beta levels of individual portfolios within the fund or strategy are designed to be between 1.0 and 1.8, depending on the client's risk preferences.

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