Your fund beat its benchmark. Now explain why.

Performance measurement answers "how much did we make?" Attribution answers "where did it come from?" This guide builds both from the ground up: returns, fees, risk, contribution and attribution, then how it all works for equities, bonds, derivatives and currencies. Every idea comes with numbers you can change and watch move.

PortfolioBenchmarkActive return (the gap)

Start with chapter 1

Use the switch at the top to set your level. Beginner adds plain-language analogies. Professional adds methodology notes, standards and edge cases. The interactive labs work the same for both.

Part I: Measuring returns

  1. 1What a return actually is
  2. 2When money moves in or out
  3. 3Time-weighted vs money-weighted
  4. 4Linking returns over time

Part II: What it costs

  1. 5Fees: what the manager takes, and how
  2. 6Performance fees and crystallization

Part III: Relative performance and risk

  1. 7Against the benchmark, and at what risk

Part IV: Explaining the return

  1. 8Contribution: which holdings drove the return?
  2. 9Attribution: where did the active return come from?
  3. 10Cariño smoothing: how and why

Part V: Across asset classes

  1. 11Equities: price, dividends and corporate actions
  2. 12Bonds: income, yield changes and duration
  3. 13Derivatives: exposure without capital
  4. 14Currency: two returns in one

Reference

  1. 15Check yourself
  2. ·Glossary

All numbers are illustrative. The models are simplified for teaching: annual coupons, Black-Scholes options, simplified fee mechanics and no intra-period trading. Real systems add transaction-based returns, daily valuation, tax and corporate action processing, and reconciliation to the official TWR.