What is an assignment analysis?
Assignment analysis is a tool used to measure the performance of fund managers. Many institutional investors use this technique to find out what percentage of profits can be directly attributed to the performance of the fund manager. The assignment analysis focuses on many variables such as assets, investment policy and individual selection of investments. Mutual fund sometimes provides revenues and it is not clear whether it was simply because the market increased value or whether the fund manager did a good job. The assignment analysis determines which percentage of the fund's increase was the result of the decision of the fund administrator. Individual investors usually do not have access to the information necessary to analyze the assignment. As a result, institutional investors are traditionally a type of investor who uses this strategy. When analyzing is an asset allocation. The allocation of the assets describes what percentage of the fund's money is assigned to each type of asset class. For example, a certain amount of money can be assigned to shares, another percentage of bondEnto on the cash market. Assignment of assets can play a large role in the overall performance of the mutual fund.
Fund administrator could decide to reduce the percentage of shares in the portfolio and increase the percentage of bonds. If the stock market significantly reduces the value after this decision, the fund manager would effectively save a large amount of money. If the stock market increased value, the fund manager would be responsible for the missing opportunities.
Assign analysis also focuses on the fund's investment policy. Some managers will use the investment strategy in stocks, while others will rather invest in value shares. This process focuses on the effectiveness of each type of investment policy and determines whether other policy could provide better returns.
In addition to the overall strategy of the fund manager, the analysis of attribution also focuses on the performance of selected individual securities.If the fund manager chooses securities that work well, it will positively reflect it. If the securities work badly, it will not reflect the manager well.