Question 5 April 2015 ST5

Discussion in 'SP5' started by Rachael Henry, Apr 9, 2018.

  1. Rachael Henry

    Rachael Henry Member

    Please help!

    In April 2015 question 5 I was trying to get stock sector attribution. I have learnt how to calculate stock attribution as per the method in asset September 2013 question 18. That is the stock attribution is the return on the actual portfolio minus the return on the notional portfolio. I have calculated the notional portfolio by starting with 50% bonds 25% overseas and 25% domestic equity and applying index returns and rebalancing to 40/40/20 (benchmark at end of period as index would do). Where am I going wrong? Is there an equivalent asset answer similar to method shown in September 2013?

    Is there a set equation for these questions they confuse me!

    Thanks in advance
     
    Last edited by a moderator: Apr 9, 2018
  2. Simon James

    Simon James ActEd Tutor Staff Member

    Hi. There is no need to rebalance in this question. The question states that the fund manager does not rebalance. It is perhaps less obvious that benchmark does not rebalance either ("..set at the start of year 1 .... not amended..."). You need to consider the whole 3-year period as a whole.
     
  3. Rachael Henry

    Rachael Henry Member

    Thanks for your response Simon but sorry I still don’t get it.

    Why don’t I need to calculate a notional portfolio for April 2015 question 5? I learn that stock attribution is equal to Faa - Fan
     
  4. Simon James

    Simon James ActEd Tutor Staff Member

    Hi - I was pointing out that you don't need to rebalance. Just look at the returns over the full 3-year period for the starting allocations. The normal method should work on these 3-year results.
     

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