Question

You are provided with the following data for a three-sector LUSE portfolio (P) and the benchmark (B):

Sector Weight (P) Weight (B) Return (P) Return (B)

Energy 50% 50% 18% 10%

Health Care 30% 20% 3% 2%

Financials 20% 30% 10% 12%

Required:

1. Determine the allocation contribution of the following:
   1. Energy sector
   2. Health sector
   3. Financials sector

[06 Marks]

2. What was the fund managerscontribution to the portfolio performance due to security selection for the:
   1. Energy sector
   2. Health sector
   3. Financials sector

[06 Marks]

3. How did the portfolio perform in comparison to the benchmark?

[04 Marks]

4. What were the main causes of the difference in performance between the two?