Performance Attribution Analysis Method of Portfolio: How To Calculate

Attribution Analysis Method In Mutual fund Investment

Mutual fund and other investment schemes which are operating in the market these days, involve different tools and tips for helping clients in a better way. When you are planning to make investment in any of the funds and to get the best return for your money, you should be careful about the tools used for making the gain calculations. If you are not careful about these, it will really be a difficult situation for you to make the right choice.

One of the most popular and also one of the most important tools used in the financial field is the attribution analysis. With the help of this tool the money managers of different institutions try to judge the investment talent in a better way. By making the evaluation of Performance Attribution Analysis, the money managers can easily detect the funds which show positive developments. Generally, these types of analysis can be done based on four different categories, viz. allocation style, allocation sector, and activity allocation as well as stock selection. Someone who wants to get an in-depth knowledge of the evaluation procedure will have to take note of all the four factors.

How To Calculate and formulae for Performance Attribution Analysis?

Calculation can be done in the best way only when someone knows the attribution analysis formula. The formula is generally based on the sector for which the investment has been made. It also depends on the risks related to each type of investment. Therefore, one needs to have a complete idea of the calculation procedure if he wants to make the evaluation on his own.

When you are searching for the steps for attribution analysis calculation, you should also know why it is important to do the calculation.

  • It is necessary to spend some time for making these evaluations as it helps in making the selection of the financial professional in the right way.
  • Whether someone is making personal investments or on behalf of some company, he should make some effort to know how that particular person has performed in this field and how he has guided investors.
  • If you find him to be successful in this field, you can surely go for his help or you can search for other portfolio managers working in this field.

Selection of portfolio managers plays a decisive role in determining the future of your investment. Therefore, you should always make the choice skillfully. Take note of the pros and cons of every step you take when you are investing your hard earned money.

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