A measure of a fund’s volatility in relation to the stock market, as measured by a stated index. By definition, the beta of the stated index is 1; a fund with a higher beta has been more volatile than the index, and a fund with a lower beta has been less volatile. Based on past historical records, a beta higher than 1.0 indicates that when the index rises, the stock will rise to a greater extent than the index; likewise, when the index falls, the stock will fall to a greater extent. A beta lower than 1.0, indicates that the stock will usually change to a lesser extent than the index. The higher the beta, the greater the investment risk.
