Attribution Analysis in Portfolio Management

Easy Performance Evaluation Attribution Analysis

A portfolio manager is assessing the performance of a mutual fund over the past year. The fund return was 10%, while its benchmark return was 8%. The portfolio manager uses attribution analysis to determine the effect of asset allocation and security selection decisions on the fund's performance.

Which of the following statements regarding attribution analysis is TRUE?

Attribution analysis separates the total return into allocation and selection effects.

Attribution analysis can only be performed on equity portfolios.

Attribution analysis provides insights that are only relevant for fixed income portfolios.

Hint

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