Beta. A Beta is a measure of risk that, when applied to investment portfolios (as distinct from individual stocks), provides useful statistical information. It indicates a fund's past price volatility relative to a particular stock market index. The term Beta, widely used by professional investors and academics, may seem esoteric. But I believe it will gain gradual, if grudging, acceptance by individual investors. Most mainstream equity funds have Betas in the range of .85 to 1.05 (fairly close to the 1.00 Beta represented by the market in the aggregate). Especially conservative stock funds may register Betas as low as .75, meaning that in a -10% market decline, their values might be expected to fall -7.5%. Aggressive funds with Betas of 1.25 might see their values fall by -12.5%. The same general dimension of relative volatility also prevails in rising markets. Conditions in each market cycle differ markedly, and Beta should be regarded only as a rough proxy for your volatility expectations.

YAHOO! FINANCE TIP Yahoo! Finance reports a mutual fund's Beta statistics on its risk page. For an example, see VFINX's risk page.