The issue of country and sector effects is important for portfolio construction and risk management. Unlike the many studies that have addressed the issue by analyzing individual stocks, this article focuses on analyzing managed portfolios. Using global data on manager excess returns and portfolio characteristics, I examined the relative effects of country versus sector bets on excess-return variations. I then evaluated alternative portfolio construction strategies by using optimization and simulation methods. I found that active country exposure is a larger driver of variations in individual managers' excess returns than is active sector exposure. Using this information, money managers can learn current investment industry trends in country and sector selection and fund managers can construct their multimanager portfolios to reduce tracking error by weighting individual managers to limit country exposure in an overall portfolio.