CAPM E(R)=7BC ER-2-4) Question 1 RF = 6% Your advisors have suggested three global emerging market (EM) funds for you to consider, following your decision to invest in this sector of the market: LR)=107. M&W EM Fund, First State EM Fund and IMA Global EM Fund. The following information is given to help you decide which fund is best: Fund Expected return M&W EM Fund 12% First State EM Fund IMA Global EM Fund Risk free rate (UK) MSCI Emerging Market Index 20% Calculate the Sharpe, Treynor and Jensen performance measures for each fund, presenting their ranking alongside the position of an appropriate benchmark. (15%) 8% 9% 6% 10% Beta 0.8 1.1 0.7 0 1 Standard deviation 27% 15% 16% 0 1.1 1.2 "When a portfolio is being actively managed, it is difficult for the manager to guarantee that basic stability requirements are being met." Discuss the implications of this statement, explaining clearly what is being described and why the issue is important for the measurement of portfolio performance. Your answer should consider the statement from the point of view of a mutual fund investor. (18.3%) (TOTAL 33.3%)