Magnum Funds is a well-diversified balanced mutual fund. Following table provides details about Magnum’s portfolio return from various asset classes, its portfolio allocation to various assets, the asset allocations of the benchmark portfolio and the index returns in various asset classes.

Assets	Actual Return	Actual Weight	Benchmark Weight	Index Return
Equity	6.5%	0.6	0.5	6%
Bond	2.3%	0.3	0.4	2.5%
Cash	0.5%	0.1	0.1	0.5%

Based on the information above answer following questions.

1.Estimate Magnum’s relative performance in comparison to its benchmark?

2.What is the contribution of asset allocation decisions to Magnum’s relative performance compared to the benchmark?

Answer rating: 100% (QA)

To answer the questions we first need to understand a few terms and concepts 1 The actual return refers to the return achieved by the mutual fund in t... View the full answer