Attribution Analysis in Mutual Fund Performance Evaluation

A mutual fund manager is assessing the performance of the fund's portfolio over the past year. To evaluate the sources of return, the manager implements attribution analysis. This analysis separates the fund's performance into contributions from asset allocation decisions and individual security selection.

In this context, the manager finds that the fund has outperformed its benchmark. Upon deeper analysis, they determine that the majority of the excess return is a result of effective security selection rather than favorable asset allocation.

Given this information, which of the following statements best describes the risk adjusted performance evaluation in this scenario?