Question: 2. In a particular year, Wiseguys Mutual Fund earned a return of 15% by making the following investments in the following asset classes: Asset Class

2. In a particular year, Wiseguys Mutual Fund earned a return of 15% by making the following investments in the following asset classes:

Asset Class Weight Return
Bonds 10% 6%
Stocks 90% 16%

The return on a benchmark portfolio was 11%, calculated as follows:

Asset Class Weight Return
Bonds (Lehman Index) 40% 5%
Stocks (S&P 500 Index) 60% 15%

For Wiseguys Mutual Fund:

a. What is the contribution of asset allocation across markets to the total excess return?

b. What is the contribution of security selection?

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