This topic area is extremely confusing. What is the real importance of this topic area. I seem to be missing that.
Break it down into two learning sections. One where you learn the market , security, and currency returns. And the other where you have to calculate the returns relative to a benchmark portfolio. The benchmark comparisons are a little tougher and less intuitive. I find it helpful on those to repeat “MWWR and SWRR” over and over again. Market Allocation Effect= Wi-Wb (Return i) Security Allocation Effect= wi (Returni -Return B) Currency i cant find an easy way to remember but after doing 3-4 of these you get into a rhythm. IMHO i would not skip out on this section. This seems like an area with a ton of testable material even in essay form.
Indeed this part is very difficult. I’ve looked at it a few times and I’m still having trouble.
Skip- I think cfahead is talking about the tail end of the reading. The key point of the multi-period section is-- you can’t just add or even chain-link the attribution contributions ever. There are two correct ways to do it first method is S1* (1+R2(bench)) + S2*(1+R1(portfolio)) Quiz: anyone want to share the second method?
i thought that was the only way of doing it! whts the other way?
Multiple Attributes (CFAI Text Vol 6 P.222~226) Any short-cut to calculating the decomposition of “Attribution to Security Selection” & “Attribution to Market Allocation” (the results as shown on P.225) ?
Guys this whole section won’t be more than 5% (according to Schweser Secret Sauce, which- should be taken with a grain of salt).