Hello, financial explorers! Today we're decoding 'Alpha' in mutual funds. Alpha measures the 'extra return' a fund manager provides beyond a benchmark index, like the BSE Sensex. A high Alpha means your fund manager is outperforming market expectations. Calculating Alpha helps you see if your mutual fund's performance justifies its fees. But remember, while Alpha is useful, it's based on past performance and is one of many factors to consider when investing. Ultimately, understanding Alpha is a step towards making your investment journey smoother. Happy investing!

1. Semi-Deviation is a risk measurement tool that focuses on the downside risk or negative returns of a mutual fund. It offers an advantage in assessing potential losses and facilitating better risk-reward analysis. However, it does not consider upward volatility and involves a complex calculation.
2. The calculation of Semi-Deviation involves calculating the average of negative returns, subtracting the overall mean, squaring the result, finding the average of these squared deviations, and finally taking the square root.

1. Maximum Drawdown (MDD) is an essential risk measure that helps fund managers and investors evaluate the potential loss from peak to trough in an investment, particularly relevant in the context of Indian mutual funds.

2. MDD, while providing an intuitive understanding of the worst-case scenario for an investment and being effective with non-normal distributions, has certain limitations such as bias towards past performance and extreme events, and does not account for the recovery timeframe.