Hi, This is my first post here, and I've stumbled upon something I don't understand in the above question. Looking at the Examiner's Report, I'm not able to derive the 'Asset Class Selection' figure. I know the Stock selection is derived by (Fund Return - Index Return)*Fund Appreciate your help.
Don't have the report in front of me but generally speaking the stock selection profit is as you gave. The asset selection profit (ie equities/bonds etc) is calculated as (actual weight in class - benchmark weight in class) * (benchmark return in class - overall benchmark return) This is if your "middle" fund is notional stocks in actual weightings Eg say your benchmark is 60/40 equity and bond Benchmark equity is 7% benchmark bond is 5% Overall benchmark is .6*7+.4*5 = 6.2 if actual holding is 70/30 asset selection profit to bonds is (.3 - .4 ) *(.05 - .062) then you could add up all the bits to get the total. I'm pretty sure this approach worked for that question.
