Which factor is NOT considered as a driver of Alpha?

Alpha is a measure of an investment's performance relative to a benchmark, indicating how much value a portfolio manager adds through active management. To understand the driving factors of Alpha, it is essential to differentiate between those elements that contribute to it and those that do not.

Active management strategies are fundamental drivers of Alpha, as they involve research, security selection, and timing decisions that aim to outperform a benchmark. This active approach allows managers to introduce unique insights and strategies that can generate excess returns.

Market volatility can impact Alpha because periods of heightened volatility may present opportunities for skilled managers to capitalize on mispriced securities. However, it is not a direct driver of Alpha; rather, it can enhance or inhibit the ability to achieve positive Alpha depending on how a manager responds to market conditions.

Benchmark exposure refers to the level of risk taken relative to a benchmark index. A manager's choice of securities and sectors that differ from the benchmark can either enhance or detract from performance, hence it's also considered a driver of Alpha.

Systematic risk factors, on the other hand, relate to the overall market risk inherent in all investments and are typically associated with beta rather than Alpha. These factors are priced in the capital markets and represent the returns attributable to the market as a whole, rather