Performance attribution identifies sources of portfolio returns from "summary" of Institutional Investment Management by Frank J. Fabozzi
Performance attribution is a crucial tool used by institutional investors to analyze the components that contribute to the overall returns of their portfolios. By breaking down the returns into various sources, investors can gain valuable insights into the drivers of performance. This process helps investors understand which investment decisions have been successful and which have not, allowing them to make more informed decisions in the future. There are several key sources that performance attribution can identify, including asset allocation decisions, security selection, and market timing. Asset allocation refers to the strategic decision of how to distribute capital among different asset classes, such as stocks, bonds, and alternative investments. By analyzing the impact of asset allocation on portfolio returns, investors can assess whether their overall strateg...
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