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According to Modern Portfolio Theory, a theory of investment which tries to maximize portfolio expected return for a given amount of portfolio risk, portfolio return is a product of -to put it extremely simply - alpha (return from skill) and beta (market return).

According to Neil Record, CEO of Record Currency Management, who spoke at the CFA Institute's UK Annual conference last month, alpha is necessarily (globally) zero-sum - unless it is a beta from somewhere else. Zero-sum describes a situation in which a participant's gain or loss is balanced by the losses or gains of the other participant.

Much of alpha is not mathematically possible. It could be said that some of it is in fact beta from other markets, which are different or unusual (or uncorrelated)... and thereby called alpha.

Whereas equity beta is available to all, requires no skill from the part of the investor and is excess return for accepting investment risk, alpha is additional excess return enjoyed by a maximum of half of investors - as a result of a competition between investors for the best investments. So when everyone can have beta, only half of investors can have alpha (and the other half loses).

The competition between money raisers and money providers results in a balance of return (for risk), namely beta. So if there is no risk, there is no beta, and no beta means no equity investment. Other beta asse......................

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