Alpha versus Beta
In this case, Alpha is not a planet or a constellation. In the world of investments, Alpha is understood as a fund’s excess profitability according to a reference index. For example an Alpha of 3% means that a fund gets a 3% additional return. Usually, Alpha and Beta are measured at the same time.
Finding Alpha means to find above the market’s extra profitability.
A guide to finding Alfa
In a previous article we explained a simple investment strategy to bet on those companies where the most successful hedge funds and the ETFs that clone them are investing. In that article we described an investment strategy used in order to follow the best of the best.
Where to invest, Inbestme’s Scope:
Once we have described the path towards Alpha we are left with just one task: unveil the positions of these “cloners”.
7 positions where all hedge fund cloning strategies are investing:
AAPL: Apple
AGN: Allergan PLC
BRK B: Berkshire Hattaway
EMC: EMC Corp Mass
EQIX: Equinix Inc.
GM: General Motors
GOOGL: Alphabet
13 positions where ALFA and GURU match:
AAPL: Apple
AGN: Allergan PLC
AIG: American International GR
AMT: American Tower Corp
BIDU: Baidu INC – Spon ADR
BRK B: Berkshire Hathaway Inc Cl
CLNY: Colony Capital
DAR: Darling Ingredients
EMC: EMC Corp/MA
EQIX: Equinix Inc.
GM: General Motors CO
GOOGL: Alphabet
JPM: JP Morgan Chase & Co
Pursuing Alpha is not necessary in order to make successful investments. In fact, building a diversified portfolio is already a good, simple and cost-efficient strategy. If we continue to use the previous article’s nomenclature it would mean to assure the Beta index we chase.
If you also want a greater customization and adding more investment strategies to your portfolio our customized portfolios have been designed with this purpose in mind.
If you want to know how to invest better, easier and at a low cost, click here.
