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CFA Level 1
Portfolio Management

Understanding Performance Attribution

Easy Performance Evaluation Performance Attribution

In a recent performance evaluation of a mutual fund, the portfolio manager noted that the fund achieved a return of 10% over the year, while the benchmark index returned 8%. The portfolio manager attributed this outperformance to both asset allocation and stock selection.

To better understand how these factors contributed to the overall performance, it is essential to perform a performance attribution analysis.

Which of the following statements correctly describes a component of performance attribution?

Hint

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