Chartered Investment Manager (CIM) Practice Exam · Question
Which of the following performance measurement attribution components isolates the impact of a portfolio manager's asset allocation decisions?
The allocation effect in performance attribution measures how much of the portfolio's return is due to the manager's decision to overweight or underweight asset
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Question: Which of the following performance measurement attribution components isolates the impact of a portfolio manager's asset allocation decisions?
Answer options:
- Selection effect.
- Interaction effect. ✅ Allocation effect.
- Market timing effect.
Correct answer: Allocation effect.
Explanation: The allocation effect in performance attribution measures how much of the portfolio's return is due to the manager's decision to overweight or underweight asset classes relative to a benchmark.
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