By: Eric Brandhorst, State Street Global Advisors
Published: Benefits Canada Magazine, March 2005

Excerpts:

For over three decades, investors have used the alpha/beta framework to attribute portfolio returns and help articulate investment objectives.  This framework lets investors assess how both market returns (beta) and attempts to add value (alpha) have contributed, or may contribute, to returns.  There are a host of reasons why alpha and beta will likely evolve from a useful analytical tool to a framework for portfolio management. 

Portfolios stand to benefit greatly from separate portfolio management of alpha and beta, and benefits accrue to both investors and investment managers.”

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