the answer is: Advantage 2 is incorrect. The Completeness Fund approach is designed to eliminate misfit risk (defined as the standard deviation of the normal portfolio return differences from the investor’s benchmark). Therefore, the Completeness Fund likely will eliminate the additional return associated with misfit risk. in the question, advantage 2 says completeness fund is designed to maintain the active return of the portfolio, while minimizing misfit risk. so why deny advantage 2???
It will increase misfit risk, since those added “style” funds will be off from normal port.