bpdulog

1. Sure, you could. But say this agregate 100% is your domestic equity portfolio. Out of your domestic equity you gave 70% to index, 10% to MGR1 and 20% to MGR2. If MGR1 is running a long short domestic equity fund, the tracking error is going to be high. It might be ok with you, if he is creating enough alpha but it is a consideration.

2. Yes, but manager 1 and 2 do not need to be running beta neutral portfolios, just active.