This is a follow-up question on one of my earlier posts. So here I have the sector weights and sector returns for the russell midcap index for the year 2007. My understanding is that If I multiply each sector weight by the respective sector return; and then sum up the products, the result will be the total return for the index. Is this not correct…because I did not get the total number (5.61) by doing so. Any insight on how to reconcile the breakdown will be appreciated. thanks! Earlier post by bigwilly: Hope this Helps. It doesnt want to keep the format, so the first number is the Avg Bench Weight over the year, and the second is the return for the Sector. Avg. Bench Bench Weight Return ------ ------ GICS Sector ----------- Energy 7.92 47.39 Materials 5.65 26.02 Industrials 12.54 18.24 Consumer Discretionary 17.08 -10.14 Consumer Staples 5.58 8.64 Health Care 8.87 14.17 Financials 18.30 -13.79 Information Technology 13.79 5.6 Telecomm Service 2.24 -4.81 Utilities 8.03 14.23 ------ TOTAL 5.61
The weightings over the year were dynamic, and you are left with only the average weighting for the year, which will not produce what you are looking for.