32. As a corporate treasurer, you are responsible for evaluating prospective investment managers for your company's pension fund . You have interviewed three managers, examined their reported investment performances, and identified clear-cut differences in their investment approaches.

Manager A has developed a very appealing and apparently successful investment process based on extensive research and back-testing, but she has not yet managed money using this process.

Manager B has been investing relatively small amounts of money over only the past two years, producing what appears to be extraordinary investment performance.

His process is based on exploiting what he believes to be a market inefficiency (or anomaly) to produce superior returns.

Manager C is a global investment counselor who emphasizes active selection of stocks and bonds across the major world markets. He has a long track record and uses a well-established and widely accepted process for selecting securities.

a. Discuss the usefulness of historical investment performance in evaluating investment managers.

b. For each of the three managers, identify and discuss the two most important factors that you would consider in assessing the manager's performance.