Primo Management Co. is looking at how best to evaluate the performance of its managers. Primo has been hearing more and more about benchmark porttolios and is interested in trying this approach. As such, the company hired Sally Jones, CFA, as a consultant to educate the managers on the best methods for constructing a benchmark portfolio, how best to choose a benchmark, whether the style of the fund under management matters, and what they should do with their global funds in terms of For the sake of discussion, Jones put together some comparative two-year performance numbers that relate to Primo's current domestic funds under management and a potential benchmark Weight Return Primo Benchmark Primo Benchmark Style Category Large-cap growth Mid-cap growth Small-cap growth 60 15 25 .50 40 10 17% 24 20 16% 26 18 As part of her analysis, Jones also takes a look at one of Primo's global funds. In this particular portfolio, Primo is invested 75% in Dutch stocks and 25% in British stocks. The benchmark invested 50% in each-Dutch and British stocks on average, the British stocks outperformed the Dutch stocks. The euro apprecated 6% versus the us dollar over the holding penod, while the pound depreciated 2% versus the dollar. In terms of the local return, Primo outperformed the benchmark with the Dutch investments but underperformed the index with respect to the Bntish stocks a. Calculate the amount by which the Primo portfolio out- (or under-) performed the market over the period. (Input the value as positive value. Do not round intermediate calculations. Round your answer to 1 decimal place.) Prnno portfolio underperformedbrar 14 %
b. Calculatethe contribution to performance of the pure sector allocation (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 1 decimal place.) - Pure sector allocation 2 %
c. Calculate the contribution to performance of the security selection decisions (Do not round intermediate calculations. Round your answer to 1 decimal place.) ple. e Security selection decisions .8% References eBook & Resources