Glossary

alpha

A measure of performance on a risk-adjusted basis. Alpha takes the volatility (price risk) of a mutual fund and compares its risk-adjusted performance to a benchmark index. The excess return of the fund relative to the return of the benchmark index is a fund’s alpha.

bear market

A market in which the prices of securities are falling. A downturn of at least 15–20% in more than one index is considered to be the start of a bear market.