This thesis aims at measuring portfolio performance of type-A and type-B investment funds in Turkey with alternate indices over the period of January 1, 1998 - June 30, 2000, testing whether alternative evaluation criteria give similar results, comparing portfolio performances of Type A and Type B with those of T-Bills, and ISE-100 in order to see the significance of the differences and validity of capital market theory in Turkey over the same period.
Before 1960, investors evaluated portfolio performance almost entirely on the rate of return, first studies related to the performance of a fund was done by Cowles in 1933. But this study and the related studies were no more than comparing returns of a group of fund to a passive portfolio.
Although they knew that risk was a very important variable in determining investment success. The reason for ignoring risk was the lack of knowledge of how to measure and quantify it. After the pathbreaking contributions of Markowitz and development of portfolio theory in early 60s, and CAPM in subsequent years, risk, measured as either by standard deviation or beta, was included in evaluation process. However since there was not a single measure combining both return and risk, two factors were to be considered separately: Researchers grouped portfolios into similar risk classes and compared rates of return of portfolios in the same risk class.