Pure sector Allocation

[FrankCFA]

Does it assume that within each sector, the manager held exactly same underlyings as the benchmark?

 

[trap499]

That is the way I understand it since it is comparing the weight of the investors portfoilo to the weight of the benchmark portfolio allocated to that sector and multiplying by the benchmarks return in that sector minus total portfolio return.
Pure sector allocation does not consider the return that the investment portfolio earned in that sector, therefore it assums the manager held the same underlyings as the benchmark.
I would like someone elses input on this as well.

 

[cpk123]

Quote:
Pure Sector Allocation return equals the difference between the allocation (weight) of the Portfolio to a given sector and the Portfolio’s benchmark weight for that sector, times the difference between the sector benchmark’s return and the overall Portfolio’s benchmark return, summed across all sectors. The pure sector allocation return assumes that within each sector the manager held the same securities as the benchmark and in the same proportions. Thus, the impact on relative performance is attributed only to the sector-weighting decisions of the manager
(Institute 161)

 

[FrankCFA]

Thanks both.