An independent return factor that comes about from sources other than the usual beta returns (which per se result from the passive replication of a well-known asset class). Exotic betas include returns from exotic (unusual) sources such as direct lending, insurance, and capturing risk premiums from business types of risk other than classic business types of risk. This non-standard sort of beta is like traditional betas in terms of its ability to be passively replicated. Exotic beta proxies include the ability to invest in derivatives of volatility indexes.

Exotic beta is sometimes known as false alpha.