elcfa Wrote: ------------------------------------------------------- > darkstar Wrote: > -------------------------------------------------- > ----- > > > No, performance attribution shows the sources > of > > ACTIVE return, while decomposition shows the > > sources of TOTAL return. > > Not 100% sure what you mean or you disagree with, > but if you don’t agree with happyking02’s post > above who has put more details and is consistent > with what I wrote earlier then please provide more > details. I was disagreeing with you. You said: “Yes, if you mean performance Attribution also shows benchmarks as a component thus facilitate the comparison. Both breaks down the same return: total return, Performance Attribution has much more details than the other, and thus is used to judge the performance of the manager.” I would say this is wrong. Generally speaking, performance attribution measures the sources of active return, while decomposition (which I would call contribution) measures the sources of total return. The rule of thumb I am going to use is that if they give sufficient benchmark data, I’m going with attribution, and if not, decomposition. The curriculum for readings 46 and 47 is pretty poor in my opinion…
AMC Wrote: ------------------------------------------------------- > happyking02, > > TKVM for your advice ! > > So the Capital Gain component is the “Rate of > Return in Local Currency (3) " and Market Return > component is the “Market Index (5)” and Security > Selection component is the Security Selection (6)” > in Exhibit 3 on P.210, right ? > > Now I understand that Schweser’s note futher > decompose the Capital Gain component into (Market > Return component + Security Selection component) > and Security Selection component is incorporated > in the “Total-Return Decomposition” rather than > the “Performance Attribution”. This makes me > confused. And this why I was asking if there is a > clear borderline between Total-Return > Decomposition (P.208) & Performance Attribution > (P.211) ? > > TKVM ! Pages 208 and 211 show the same thing, just in a different format. Page 213 is performance attribution - just subtract the benchmark return from each side of the equation, and you’re left with the active return.
elcfa, happyking02 & darkstar : Thanks to all of you ! I think some confusuions are from the organization / statements ( language /wording) of the readings which are not good enough to understand easily. Anyway, I have more clear picture now. Thanks again !