What does a beta less than one typically imply about an asset?

A beta less than one indicates that the asset is less volatile than the overall market. Beta is a measure of an asset's sensitivity to market movements; a beta of 1 implies that the asset's price moves in line with the market, while a beta greater than 1 signifies greater volatility, meaning it's likely to experience larger price swings than the market itself. Conversely, a beta of less than 1 reveals that the asset's price movements are generally smaller and less sensitive to market fluctuations. Therefore, this lower beta suggests a more stable or defensive investment, as the asset tends to be less affected by market volatility compared to assets with a higher beta.

Understanding this concept is crucial for investors as it helps in assessing the risk profile of an asset relative to the overall market.