In finance, “alpha” is a measure of an investment’s performance relative to a benchmark index like the Nifty 50. To be able to compare multiple investments across sectors one needs to use a common benchmark.
Using a different benchmark index per product (say small cap index for Small Cap Alpha Portfolio) is a widely followed practice in the investing domain as it makes performance look much better and obfuscates risk. However, investors are not able to properly assess risk involved and may make poor investment decisions.
In summary, at Spotalpha, we compare all our product’s performance with the same benchmark, Nifty 50 index, to help our users properly compare products and make informed investment decisions.
Useful Links:
Alpha Ratings India
How to Use Alpha Ratings (YouTube)