A U S pension plan hired two international firms to manage the non U S equity portion of its total portfolio Each firm was free to own stocks in any country market included in the MSCI EAFE index and free to use any form of dollar and or non dollar cash or bonds as an equity substitute or reserve A...

a Overall both managers added value by mitigating the currency effects present in the Index Both exh ...

A U.S. pension plan hired two international firms to manage the non-U.S. equity portion of its total

Question:

A U.S. pension plan hired two international firms to manage the non-U.S. equity portion of its total Each firm was free to own in any country market included in the MSCI EAFE index and free to use any form of dollar and/or non dollar cash or bonds as an equity substitute or reserve. After three years had elapsed, the records of the managers and the EAFE index were as shown in the following table:
Summary: Contributions to Return

The "Country Selection" column gives the local-currency return that would have been achieved if the portfolio were invested in country indexes rather than specific stocks. You are a member of the plan sponsor's pension committee, which will soon meet with the plans consultant to review manager performance. In preparation for this meeting, you go through the following analysis:
a. Briefly describe the strengths and weaknesses of each manager, relative to the EAFE index data.
b. Briefly explain the meaning of the data in the Currency column.

Stocks
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A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...