© 2015 Shmoop University, Inc. All rights reserved.

Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Active Risk


In a portfolio, which is actively managed (like a mutual fund, a hedge fund, etc - but NOT an index fund or ETF), "active risk" refers to the risk in the portfolio taken by the actively managed investments. It ignores market risk in its assessments. Well-managed active risk, i.e. good risk adjusted returns are a key component in producing "high alpha" which is like the Good Housekeeping Seal of "smart" investing."