You and a prospective client are considering the measurement of investment performance, particularly with respect to international portfolios for the past 5 years. The data you discussed are presented in the following table:
|
International Manager or Index
|
Total return
|
Country and security return
|
Currency Return
|
|
Manager A
|
-6.0%
|
2.0%
|
-8.0%
|
|
Manager B
|
-2.0
|
-1.0
|
-1.0
|
|
International Index
|
-5.0
|
0.2
|
-5.2
|
a. Assume that the data for manager A and manager B accruately reflect their investment skills and that both managers actively manage currency exposure. Briefly describe one strength and one weakness for each manager.
b. Recommend and justify a strategy that would enable your fund to take advantage of the strengths of each of the two managers while minimizing their weaknesses.