Thanks for you explanation. I just wonder. If I just have the wights of the Stocks and the fixed income plus their historical return, BUT not what type of stocks. Can I anyways calculate the "Stock Selection"?
+Anna ekesiöö - might be a little late but without a grouping for the stocks (or types as you call it), stock selection wont make any sense. So assume if you have 2 stocks of the same type and each is 50-50 split in your portfolio and you get a 20% return for them over the year, what would you compare it to ? thats where you will need the type ..secondly once you find the type you will notice that the "type" has many more stocks and if the aggregate return of this "type" is 15% , you would like to know why you performed better..this is when you will get into stock selection and see that , ok my 2 stocks are amongst the top 2 stocks in the "type" but the "type" also had a lot of loser stocks along with it ..so finally your better performance is attributable is down to stock selection ..hope it makes sense
Nice balanced explanation of both technical and practical considerations. Thank you.
Thank you. How would you include the factor due to currency selection (I.e performance in other non-domestic markets, as well,as the domestic one)?
Thanks for you explanation. I just wonder. If I just have the wights of the Stocks and the fixed income plus their historical return, BUT not what type of stocks. Can I anyways calculate the "Stock Selection"?
+Anna ekesiöö - might be a little late but without a grouping for the stocks (or types as you call it), stock selection wont make any sense. So assume if you have 2 stocks of the same type and each is 50-50 split in your portfolio and you get a 20% return for them over the year, what would you compare it to ? thats where you will need the type ..secondly once you find the type you will notice that the "type" has many more stocks and if the aggregate return of this "type" is 15% , you would like to know why you performed better..this is when you will get into stock selection and see that , ok my 2 stocks are amongst the top 2 stocks in the "type" but the "type" also had a lot of loser stocks along with it ..so finally your better performance is attributable is down to stock selection ..hope it makes sense
thank u so much it was really helpful and very clear !
Thanks a lot Sir, it was very well explained. Sir could you upload some practical examples too along with the interpretation.
How do you know what the benchmark weight is?
Then what is benchmark portfolio