Question

please include formulas used in excel etc

Relative Weight Relative Return Contribution in Basis Points Stock Sector Selection Weight Total Fund Weight 22.12 21.84 6 Region 7 Americas 8 Emerging markets 9 Developed Europe 10 Japan 11 UK/Ireland 12 Developed Asia (ex-Japan) 13 Multinational Index Weight 20.49 18.44 5.86 13.57 6.99 15.34 Fund Return 6.93 4.30 18.50 -15.38 16.20 -19.25 21.62 Index Return 7.93 0.30 16.50 13.62 13.80 18.11 2.13 19.13 13.21 -13.75 24.62 19.31 5 Total 100 100 0 8 Questions 9 1. What is the fund's largest overweight? What can you infer about the portfolio manager's outlook? 2. Where did stock selection have the largest positive impact? Negative impact? 3. Explain the breakdown of the total contribution of emerging markets to performance 4. Explain the breakdown of the total contribution of Japan to performance.

Answer 1

Excel Formulas are

1. Relative Weight = Fund Weight - Index Weight

2. Relative Return = Fund Return - Index Return

3. Stock Selection Contribution = Fund Weight*Relative Return

4. Sector weight contribution = Index Return*Relative Weight

							Contribution in basis points
Region	Fund Weight	Index Weight	Relative Weight	Fund Return	Index Return	Relative Return	Stock Selection	sector weight	Total
Americas	22.12	20.49	1.63	6.93	7.93	-1.00	(22.12)	12.93	(9.19)
Emerging markets	21.84	18.44	3.40	-4.30	0.30	-4.60	(100.46)	1.02	(99.44)
Developed Europe	3.46	5.86	(2.40)	18.50	16.50	2.00	6.92	(39.60)	(32.68)
Japan	18.11	13.57	4.54	-15.38	-13.62	-1.76	(31.87)	(61.83)	(93.71)
UK/Ireland	2.13	6.99	(4.86)	16.20	13.80	2.40	5.11	(67.07)	(61.96)
Developed Asia(Ex Japan)	19.13	15.34	3.79	-19.25	-13.75	-5.50	(105.22)	(52.11)	(157.33)
Multinational	13.21	19.31	(6.10)	21.62	24.62	-3.00	(39.63)	(150.18)	(189.81)

1. Fund is maximum overweight in Japan. Based on Fund's relative weights, it appears that the manager is bullish on Asian & Emerging Markets & he appears bearish on Developed markets (Europe & UK/Ireland).

2. Based on the table, stock selection had maximum positive impact in Developed Europe (6.92 bps) & highest negative impact in Developed Asia (Ex Japan).

3. Total Contribution of Emerging Markets to performance is -99.44 bps of which stock selection contributes -100.46 bps & sector weight contributed 1.02 bps i.e. because of portfolio manager skills in stock selection, he contributed -100.46 bps return over the index & because of his overweight on the sector, he contributed 1.02 bps over the index

4. Total Contribution of Japan to performance is -93.71 bps of which stock selection contributes -31.87 bps & sector weight contributed -61.83 bps i.e. because of portfolio manager skills in stock selection, he contributed -31.87 bps return over the index & because of his overweight on the sector, he contributed -61.83 bps over the index