Brinson-Fachler Effects

Effects measure the impact of the manager's actions. The following table describes each Brinson-Fachler effect.

Return	Formula	Description
Currency	Fund Segment Weight * Fund Currency Return − Index Segment Weight * Index Currency Return	Measures the impact of overweighting or underweighting currency in the portfolio relative to the benchmark.
Currency Cross Product	Fund Segment Weight * Fund Cross Product Return − Index Segment Weight * Index Cross Product Return	Measures the difference between the portfolio's and the benchmark's currency cross product contributions.
Allocation	(Fund Segment Base Weight − Benchmark Segment Base Weight) * (Benchmark Segment Local Return − Benchmark Total Local Return)	Measures the effect of overweighting or underweighting the sectors.
Selection	Benchmark Segment Base Weight * (Fund Segment Local Return − Benchmark Segment Local Return)	Measures the impact of choosing securities within an asset segment that provide different returns from the benchmark. It evaluates the manager's skill in choosing better performing securities than those in the benchmark. Can be displayed separately on attribution reports or included with the interaction effect. This is the same calculation as the security selection in the Karnosky-Singer model.
Interaction	(Fund Segment Base Weight − Benchmark Segment Base Weight) * (Fund Segment Local Return − Benchmark Segment Local Return)	Measures the interaction in the other effects. Can be displayed separately on attribution reports or included with the selection effect.
Total Attributed	Currency + Cross Product + Allocation + Selection + Interaction	The value added by active portfolio management. That is, the excess return. It is the sum of the currency, cross product, allocation, selection, and interaction effects.