Mutual Funds and the Index Model

Go to www.morningstar.com and select the Funds tab. When the Mutual Funds page opens, scroll down to find the Find a Mutual Fund section. Select the 3 year link in the Top-Performing Mutual Funds section to get a list of the funds that qualify. Choose three of the listed funds, with the constraint that the funds have different investment styles (e.g., small cap, global, precious metals, emerging markets, etc.).

For each fund, click on its ticker symbol to get a Snapshot Report, then click on the link for Risk Measures on the left side menu. Identify each fund's Beta, Alpha, and R-Squared coefficients. Compare both the Standard Index and the Best Fit Index. Given the risk levels of the funds, which of them outperformed the market? Which fund had the highest level of risk-adjusted performance?

Portfolio Theory

The History of Economic Thought website present a concise history of portfolio theory development and the research contributors at http://cepa.newschool.edu/het/schools/finance.htm. Who would you list as a major contributor to the development of modern portfolio theory? Why?