Good Alpha
For long only equity funds, what do you guys think is considered good alpha? What about funds that outperform index by 100-300bps p.a. over 5 years?
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If they outperform net of fees, that's great. The more the merrier. Another thing to consider is creating alpha in down markets. That's the secret sauce.
I like to think about it by breaking the alpha and beta apart. Your beta is your benchmark, say SP500. If your alpha is 5% gross with a sharp ratio of 1 and a correlation of zero. Then you have a product that can attract billions in an institutional setting.
^ exactly right. If you can outperform with less risk it's a homerun.
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