our client's current portfolio of $2m is invested as follows:

Summary of Current Portfolio
	Value	% of Total	Expected Annual Ret	Annual Std. Dev
Short-Term Bonds	$200,000	10%	4.60%	1.60%
Domestic Large Cap Equities	$600,000	30%	12.40%	19.50%
Domestic Small Cap Equities	$1,200,000	60%	16.00%	29.90%
Total Portfolio	$2,000,000	100%	13.80%	23.10%

Your client soon expects to receive and additional $2m and plans to invest the entire amount in an index fund that best complements the current portfolio. You are currently evaluating the four index funds shown in the table below for their ability to produce a portfolio that will meet two criteria relative to the current portfolio: (1) maintain or enhance expected return and (2) maintain or reduce volatility

Each fund below is invested in an asset class that is not substantially represented in the current portfolio

Index Fund Characteristics
Index Fund	Expected Annual Ret.	Expected Annual Std. Dev	Correlation of returns w/current PF
Fund A	15%	25%	+0.80
Fund B	11%	22%	+0.60
Fund C	16%	25%	+0.90
Fund D	14%	22%	+0.65

Which fund do you recommend to your client. Justify your choice by describing how your chosen fund best meets both of your client's criteria. No calcs. required.