Performance Decomposition/Atribution CFAI/Schweser confusion

This is for reading #47. Schweser has the formula that separates capital gain into market return and security selection as part of decomposition (pgs 135 - 138), but CFAI has it listed under “security selection” in performance attribution (pg 211). Also, for the security selection contribution part of the equation, CFAI uses (pj - Ij) times the weight, and also uses Ij times the weight for the market return component. However, Schweser uses a different variable for the security selection contribution and the market return component. They use Rj,b for the security selection contribution and Rj,l for the market return component. Obviously I feel like if there is a contradiction I should go with CFAI who is making the exam, but conceptually I want to make sure I understand it. Does CFAI use the passive index as a benchmark so they consider the formula with market return + security selection + yield component + currency component an attribution and not a benchmark? For the terms in the formula, CFAI makes sense because you’re looking at excess return over a passive index, so it wouldn’t make sense to use a different term, right?

CFAI is the ONLY one that matters

I don’t see the contradiction you’re talking about – can you refer me to what page in Schweser Notes? Also, see if the first presentation I built on my blog is helpful: http://www.houseofgjertsen.info/2011/04/global-portfolio-return-attribution/

a do what now?

If possible, stick with CFAI, which has done a good job already.

The first contradiction I’m talking about is the definition of what you’re doing with the formula. The LOS and especially Schweser make clear distinction between return DECOMPOSITION and return ATTRIBUTION. In Schweser, it makes it clear on page 138 in the “For the Exam” box that the formula on the top of the page that breaks up Capital Gains is part of return decomposition. CFAI has the same formula under the heading for return Attribution. gjertsen: it did help a lot. Do you have something similar for the micro attribution analysis formulas on page 94 of the Schweser notes? It seems like I can memorize 1 or the other, but have trouble remembering both.

throw your Schweser book in the garbage and go with CFAI. the test is based on CFAI material, not the junk in Schweser