361 University of Alts Educational Series

Did you know the average person in the U.S. spends nearly half a day interacting with media?* This mass consumption creates information overload for many, and it’s a trend we’ve heard a lot about from our advisor clients. Many of our clients noted that investors are coming into meetings having consumed a lot of data points on investments, and are confused about the statistical terms commonly used. To help alleviate this issue, we’ve created the 361 University of Alts Educational Series.

The 361 University of Alts series explores frequently used investment terms in brief three- to four-minute videos. Topics include such concepts as alpha and beta, as well as correlation and Sharpe ratio. The whiteboard format allows for visual and auditory learning alike, and all videos are client approved. Below are a few of our most popular videos.

ALPHA
Many market observers define alpha as simply a fund’s outperformance relative to a benchmark. This misconception is not only incorrect, but ignores what alpha truly identifies: manager skill.
BETA
Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. This is especially important as comparing alternative investments.
SHARPE RATIO
One common investment evaluation statistic is that of the well-known Sharpe ratio. This ratio measures an investment’s risk-adjusted return by taking the investment return less the risk-free rate and dividing that by its standard deviation. But one thing hidden in the denominator is that all deviation is not created equal.

CORRELATION
A common misconception when it comes to portfolio construction is that diversification can be achieved by combining a large number of investments. However, if they are highly correlated to one another the risk reduction benefit would be minimal.

We hope you find the 361 University of Alts series helpful as you have client conversations. Stay tuned for upcoming videos. If there is a topic you’d find useful for your client conversations, email it to info@361capital.com.

View the 361 University of Alts Educational Series >