The manager of Quantitative International Fund uses EAFE as a benchmark. Last year's performance for the fund and the benchmark were as follows:

Calculate Quantitative's country selection return contribution.
A) 12.5%
B) −12.5%
C) 11.25%
D) −1.25%
E) 1.25%

Question

The manager of Quantitative International Fund uses EAFE as a benchmark. Last year's performance for the fund and the benchmark were as follows:

Calculate Quantitative's country selection return contribution.
A) 12.5% 
B) −12.5% 
C) 11.25% 
D) −1.25% 
E) 1.25%

Quizplus · Accepted Answer

EAFE: (.30)(10%) + (.10)(5%) + (.60)(15%) = 12.5%; Diversified: (.25)(10%) + (.25)(5%) + (.50)(15%) = 11.25%; Loss of 1.25% relative to EAFE.

The Manager of Quantitative International Fund Uses EAFE as a Benchmark