Question: Pls, help me explain the concept.. 2. In a particular year, Star Mutual Fund earned a return of 16% by making the following investments in

 Pls, help me explain the concept.. 2. In a particular year,

Pls, help me explain the concept..

2. In a particular year, Star Mutual Fund earned a return of 16% by making the following investments in two asset classes, bonds and stocks : Bonds Stocks Weight 20% 80% Return 120 179 The return on a passive portfolio was 12% calculated as follows: 1 Weight Bonds (Shearson-Lehman Index) 60% Stocks (S&P500 Index) 40 Return 10 15 a. Calculate the total excess return on the managed portfolio from Star Mutual Fund. What can you say about the contribution of asset allocation across markets to the total excess return ? b. What about the security selection's contribution within asset classes to the total excess return

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