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OPINION

Beta minus, alpha plus

Beta minus, alpha plus
January 17, 2017
Beta minus, alpha plus

That said, it does not have to be this way. It would be an exaggeration to say the performance of the Bearbull Income Portfolio gives a lie to this part of portfolio theory. However, it is quite clear how - over many years - it has combined excess rewards with low risks.

That much remains true after a full assessment of 2016's performance. Since the start of 2000, the income portfolio's monthly returns have averaged 0.56 per cent. Simultaneously, these returns have a standard deviation from the average - the most usual measure of risk in portfolio theory - of 3.1 per cent. Contrast that with returns from the FTSE All-Share index over the same 17 years - its monthly returns average is just 0.17 per cent, yet that has come with a standard deviation of 4.1 per cent.

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