Beta accounts for the differences in volatility (standard deviation) between the return series of each asset and the Total Market
Assets are moving in sync with the market if their beta is close to 1
The midcap ($2bn - $10bn) and largecap ($10 bn) equities of the selection- in a range of 0.7< asset betas < 1.0 - are expected to be less volatile than the overall market
Screened for below average volatility, exposing the portfolio holder to moderate risk, the selection will, on average, be linked to moderate performance
Assets in the selection might enter consideration as potential investment if such assets are less volatile than current portfolio volatility
- to fit the bill, an asset's expected return must be higher than the existing portfolio's expected return and feature a low beta to this portfolio
- in simple terms, "new asset return (expected) > portfolio return (expected) * beta of new asset to existing porfolio