What does attribution mean in finance?

For investors, attribution analysis works as a way to assess the performance of fund or money managers. Attribution analysis is an evaluation tool used to explain and analyze a portfolio’s (or portfolio manager’s) performance, especially against a particular benchmark.

What does portfolio attribution mean?

Attribution analysis, also known as “return attribution” or “performance attribution,” is an evaluation tool used to explain and analyze a portfolio’s performance against a particular benchmark. It is used to identify sources of excess returns from a firm or fund manager’s active investment decisions.

What is attribution in private equity?

The aim of performance attribution is the dissection of the portfolio performance into several components, where each component is associated with a particular decision in the investment process.

What is fund performance attribution?

Performance attribution interprets how portfolio managers achieve their performance and measure the sources of value added to a portfolio. To determine success, these managers seek to outperform their scheme returns with respect to a benchmark. This excess return with respect to the benchmark is called active return.

What is the difference between contribution and attribution?

When assessing attribution, you want to determine if the program caused the observed outcomes. When assessing contribution who want to determine if the program contributed to or helped to cause the observed outcomes.

What is the difference between attribution and contribution?

CSOs often need to assess whether, or how far, their actions influenced a change or set of changes. The term attribution is used when this can be accurately measured. The term contribution is more loosely defined. It normally means a CSO helped produce a change alongside other agencies or factors.

What is the difference between performance and attribution?

Performance attribution determines how the portfolio manager’s asset allocation and selection of securities affects the portfolio’s performance when compared to a benchmark. Total attribution is the difference between the portfolio’s return and the benchmark’s return.

How do you calculate attribution?

How to Calculate Performance Attribution

  1. Locate Sector Weights and Returns of the Portfolio.
  2. Multiply Sector Weights by Differences in Returns.
  3. Calculate Aggregate Estimate for Pure Sector Allocation.
  4. Calculate Sector Weights by Differences in Returns.
  5. Calculate Aggregate Estimate for Returns.

What is factor based attribution?

Factor-based performance attribution is commonly used to explain the sources of realized return of a portfolio. The methodology relies on a factor model of asset returns to decompose a portfolio’s return according to a set of factors.

How is attribution calculated?

Subtract the weight of each sector in the portfolio from the weight of the same sector in the benchmark. Multiply the difference obtained with the difference in returns between the benchmark return of the sector and the return on the portfolio’s benchmark.

How is attribution of a fund calculated?