Anyone else feels that the cfai answer to this question is bizarre? PMs are benchmarked to a particular index and portfolio attribution analysis against that benchmark shows the selection or allocation success. I don’t understand how comparing a performance of the portfolio to a sector index can can determine PMs success in stock selection?! I’d appreciate if someone could please educate me here. Thanks!
Better post the question here…
This is something I guess you are not needed to know in greater detail in Level I. It is gone thro’ in great level in the Level III curriculum. So wait for it.