Example The table presents the actual return of each sector of a manager's portfolio in column (1), the fraction of the portfolio allocated to each sector in column (2), the benchmark or neutral sector allocations in column (3), and the returns of sector indexes in column (4). (1) Actual Return (2) Actual Weight (3) Benchmark Weight (4) Index Return 2.0% 0.70 0.60 Equity Bonds Cash 1.0 0.20 0.30 2.5% (S&P 500) 1.2 (Aggregate Bond Index) 0.5 0.5 0.10 0.10 Performance Evaluation and Excess Return 28 Example 1. How does the manager perform? 2. What was the contribution of security selection to relative performance? 3. What was the contribution of asset allocation to relative performance? Performance Evaluation and Excess Return