How Much Should You Rely on Beta?

In Part I of a series on modern portfolio theory, we look at beta to determine the level of a fund's index-related risk

Esther Pak 31 May, 2011 | 12:08PM

Read more from Morningstar's Managing Risk Week here.

Question: After the bear market, I've become a lot more attuned to how risky my investments are. Not being a finance person, I'm not sure how to use statistics like beta when selecting and monitoring my investments. Any pointers?

Answer: Individual OEIC Fund Reports on Morningstar.co.uk feature a Risk and Rating tab, which lists a number of quantitative risk/return measures. These measures include Morningstar's risk-adjusted ratings, several measures of volatility, such as standard deviation, and various Modern Portfolio Theory statistics, such as beta, for the three-, five-, 10-, and 15-year periods. Each of these measures provides a different look at a fund's risk, volatility, return, or a combination of those factors.

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About Author

Esther Pak  is an assistant site editor of Morningstar.com.

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