CAPM model explains market returns by establishing a linear relationship between returns and risks, where Beta is the linear coefficient. Beta value reflects the correlation between assets and market, that is, the fluctuation degree of financial assets compared with market benchmark.

If the beta coefficient is 1.1, the market benchmark will rise by 1%. If there is no Alpha income, the fund will only rise by 11%. However, if the fund gains 2%, the extra 9% income is Alpha income, which has nothing to do with market fluctuation. It is the excess income obtained by fund managers through management, timing and stock selection. Most active funds in the market pursue Alpha income.

notes on beta income

beta income is an expected income, which is linked to risk, or high beta income is obtained at the cost of taking high risks. As the saying goes, "income" in "high risk and high income" refers to beta income.

Beta returns are worthless, because as long as you are willing to take risks, you may get beta returns. For example, you can get high beta returns by adjusting your position or increasing the leverage ratio.