Performance attribution - Financial definition
Concise definition of the term performance attribution
Performance attribution is a set of techniques the objective of which is to explain the active return, which is the difference between a portfolio's return and the return of its benchmark.
Comprehensive definition of the term performance attribution
Performance attribution is one of the four steps of performance measure:
- Selection of an appropriate benchmark
- Calculation of the portfolio’s excess return
- Performance attribution
- Risk analysis
Because of the feedback that the performance measurement process provides, it is an important part of the investment decision-making process.