The Windsor Foundation, a U.S.-based, not-for-profit charitable organization, has a diversified investment portfolio of $100 million. Windsor’s board of directors is considering an initial investment...

The Windsor Foundation, a U.S.-based, not-for-profit charitable organization, has a diversified investment portfolio of $100 million. Windsor’s board of directors is considering an initial investment in emerging market equities. Robert Houston, treasurer of the foundation, has made the

following comments:
a. “For an investor holding only developed market equities, the existence of stable emerging

market currencies is one of several preconditions necessary for that investor to realize strong

emerging market performance.”
b. “Local currency depreciation against the dollar has been a frequent occurrence for U.S. investors in emerging markets. U.S. investors have consistently seen large percentages of their returns erased by currency depreciation. This is true even for long-term investors.”
c. “Historically, the addition of emerging market stocks to a U.S. equity portfolio such as the S&P 500 index has reduced volatility; volatility has also been reduced when emerging market stocks are combined with an international portfolio such as the MSCI EAFE index.”
Discuss whether each of Houston’s comments is correct or incorrect.