Beta
Definition
What is Beta?
A measure of how strongly an investmentAn asset or commitment of money made with the expectation of future income, growth, or both.'s returns tend to move relative to a market benchmarkA reference index or rate used to evaluate a fund's performance..
Example in practice
How This Looks in Practice
A beta of 1.2 suggests the fund historically moved about 20% more than the benchmark, in either direction.
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Related Terms
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The percentage of a portfolio invested across asset classes such as cash, bonds, shares, and property.
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Spreading investments across assets, issuers, sectors, or markets to reduce dependence on one exposure.
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The degree to which a portfolio depends on a small number of holdings, sectors, or issuers.
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The identity and due-diligence checks a financial institution performs before serving an investor.