What is fixed-income attribution?
It’s a method for assessing a portfolio manager’s performance with investments that rely on fixed-income assets. It breaks down the returns of each component so you can evaluate them individually instead of looking only at the aggregate performance of the portfolio.
Where have you heard about fixed-income attribution?
Some investment firms include fixed-income attribution in their annual reports, and individual investors might use it to assess the abilities of the fund manager in charge of overseeing their portfolio to see how effective their investment choices are.
What you need to know about fixed-income attribution.
When you develop an investment strategy, fixed-income attribution can help you make decisions about where and how to invest, looking at the performance of different assets in the portfolio and predicting future movements.
It’s really a way of understanding areas of strength and weakness in a portfolio. The manager might be great in some areas but weaker in others, although poor performance could be explained by an unexpected market event. The portfolio manager can pinpoint specific areas of risk, show you whether they met benchmarks for good performance and offer an explanation if they didn't perform as expected.
Find out more about fixed-income attribution.
Read our definition of yield curve for another way to measure returns.