GLOSSARY

ALPHA

6 May 2016 By PDSNET

Premium that an investment portfolio earns above a given point of reference; a measure of stock performance independent of the market. Unit trusts and other collective investment schemes (CIS) are often measured against an industry-standard benchmark index - such as the JSE overall index. Any performance above this benchmark is the scheme's "alpha". In practice, most unit trusts under-perform the JSE overall index. Individual shares, like Clicks (CLS) often out-perform the average of the JSE consistently. In its financials for the year to 31st August 2023, Clicks paid a dividend of 679c - which was a 6,6% increase compared to the previous year and more than 3,5 times the dividend that it paid ten years previously in 2014 (190c). Obviously, as a private investor, you should be looking for those shares which consistently pay an "alpha return".

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