alternative beta

noun

A portfolio management strategy that seeks to avoid sensitivity to systematic risk of the market by adding other (although diversified) systematic market factors than those having known correlations to the chart, exploiting mispricing understood as behavioral effects, risk premiums, illiquidity, currency risks, interest risks, liability risks, regulatory risks, demographic risks, war risks etc.

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Meanings

nounalternative beta (plural alternative betas)

plural alternative betas

  1. businessA portfolio management strategy that seeks to avoid sensitivity to systematic risk of the market by adding other (although diversified) systematic market factors than those having known correlations to the chart, exploiting mispricing understood as behavioral effects, risk premiums, illiquidity, currency risks, interest risks, liability risks, regulatory risks, demographic risks, war risks etc.

Origin

Actually a quarter of a decade older than the marketing-like smart beta, though of course thereafter compared to this term, building on 1990s research into hedge fund exposures. The first exchange-traded funds with such factors became investable in the mid-2010s, which necessarily combines active with passive management elements, given its definition of avoiding index risk.

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Cite this entry
APA

alternative beta. (n.d.). In WatkinsX Dictionary. Retrieved November 3, 2026, from https://dictionary.watkinsx.com/word/alternative%20beta

MLA

“alternative beta.” WatkinsX Dictionary, https://dictionary.watkinsx.com/word/alternative%20beta. Accessed November 3, 2026.

Chicago

WatkinsX Dictionary, s.v. “alternative beta,” accessed November 3, 2026, https://dictionary.watkinsx.com/word/alternative%20beta.

Source: alternative beta on Wiktionary, CC BY-SA 4.0.