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Financial Risk Manager Part 2

Financial Risk Manager Part 2

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A fund of funds (FOF) manager is conducting a performance attribution analysis for a portfolio consisting of equity and fixed-income securities to evaluate the effects of the portfolio manager's asset allocation and security selection decisions. The FOF manager uses the information presented below:

Asset classPortfolio weightBenchmark weightPortfolio returnBenchmark return
Equity58%50%8%11%
Fixed income42%50%6%7%

What is the contribution of the portfolio manager's asset allocation decision to the portfolio's overall excess return?

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