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Attribution analysis uses the Fund Managers and Benchmarks asset allocations and returns across asset classes. A potential investor wishes to understand the skills of a
Attribution analysis uses the Fund Managers and Benchmarks asset allocations and returns across asset classes. A potential investor wishes to understand the skills of a Fund Manager based on the data below:
Asset Class | Fund Weight | BM Weight | FM Return | BM Return |
Equity | 20% | 50% | 6% | 8% |
Bonds | 80% | 50% | 6% | 4% |
Explain why is it important for the investor to decompose Active returns rather than simply use Active returns to compare performance?
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