Question

What does 'Beta' in a mutual fund fact sheet indicate?

Accepted Answer

The sensitivity of the fund's returns relative to movements in its benchmark index — Beta measures a fund's sensitivity to benchmark movements. A beta of 1.2 means the fund tends to rise/fall 1.2% for every 1% rise/fall in the benchmark. Beta > 1 = more volatile than benchmark; Beta < 1 = less volatile. Beta = 1 means the fund moves in line with the benchmark.