John Irish, C F A, is an independent in vestment adviser who is assisting Alfred Darwin, the head of the Investment Committee of General Techno logy Corp oration, to establish a new pension fund . General is based in the U. S. Darwin asks Irish a bout international equities and whether the Investment Committee should consider them as an additional asset for the pension fund. 

a. Explain the rationale for including international equities in General' s equity portfolio. Identify and describe three relevant considerations in formulating your answer.

b. List three possibl earguments against international equity investment and briefly discuss the signi ficance of each.
c. To illustrate several aspects of the performance of international securities over time, Irish shows Darwin the accompanying graph of investment results experienced by a U.S . pension fund in the recent past. Compare the performance of the U.S . dollar and non-U. S. dollar equity and fixed-income asset
categories, and explain the significance of the result of the account performance index relative to the results of the four indivictual asset class indexes.

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Real Returns (2) : 6 5 4 3 2 1 • Account Performance Index • EAFE Index • Non-U.S. $ Bonds • U.S. $ Bonds • S&P Index 10 20 Annualized Historical Performance Data (%) 30 40 Variability (standard deviation)