Widely considered to be a measure of the “value added” by an investment manager. It is therefore regarded as a proxy for manager or strategy skill. Alpha is sometimes described as out performance of a benchmark or the return generated by an investment independent of the market – what an investment would hypothetically achieve if the market return was zero. More specifically, alpha is sometimes described as the return of an investment less the risk–free interest rate, or the return of the portfolio less the return on the S&P 500 index or some other relevant benchmark index.