Cecil Street Capital is a balanced fund that has recently seen a departure of several of its equity portfolio managers. Instead of hiring new managers, the fund plans to allocate part of its assets under management to external equity portfolio managers instead. A new administrative assistant put together the most recent performance for three funds that are reputed to be the best in the equity portfolio management approaches that they each employ: active, passive and semi-active:

Unfortunately, while you know that all three equity portfolio management approaches are represented above, the administrative assistant did not specify which fund used which approach.

Without using elimination, identify the most likely equity management approach for each of the three funds. Calculate as needed to support your choices.

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Fund X Fund Y Fund Z Fund return 4.8% 9.6% 8.8% Benchmark return 2.5% 9.5% 7.4% Tracking error 5.5% 0.4% 2.0% Fund X Fund Y Fund Z Fund return 4.8% 9.6% 8.8% Benchmark return 2.5% 9.5% 7.4% Tracking error 5.5% 0.4% 2.0%

Answer rating: 100% (QA)

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