Summary M.-in.njsil Benchinaik Active Co mi hulk ii PACE: -16 07 % -17 23 % 1 21 % Over Weiylir   -7 13% Published: -16 07% -17 28 % 1 21 % Unilei Weil]lit   3 34% Diffeience: Obp Obp Obp Sum :   1 21 %       Auy M ii lijietf Auy Benchmark AlIU Acliue IP HP   ■j* t>r Mqd Wt fitfrll? Bemli Wt Coin lib ActiueWt taittrib   1%) i Media £ Communication 11 96J ■1 99% 6.911 ■1 521 5 05J -Ll 51 J -3 08 48 44 . i r-jirerC. M nar l.i-L. . 14 1 11 4 . L 4 1L1 4" 1   H-altN 1 an- 1144. 1U 14 If D U ~r . D " 6 '1 f* 4 Pr J<ic"C jj. "a-j e "J*. c *> 4'0 U*J LI 1. L V 4 4 4? 44 * i.r Jir-r tapl- 1 *J. L J 11 L L J *r . L L Ll 44 4 * t Er"tq ei - 1 4. S l- . \>" Li.4- L11r' -;f '1 *   T- Iril 0' I1L4.   14 L   Li 4. L 4. 1 U 4 44   Fnan - 1 'J! 1 i .1 * > T4 IT-! PSJ( tf L 4 44 j ■ ItllLHr ULL . 11 Ot < 1 I " Lt'l _ U> UD l-ll 5J - 1L i 1 al "~4L ' 1 n . 11 ' . _ 14" 41 ' UJ-4' 1 F if j FIGURE 19.2 PACE Variance Analysis any interaction among the factor returns. Conversely, in the asset grouping methodology, each group's return is estimated separately and, therefore, any interaction between groups is excluded. Example Using PACE Using the same portfolio and date range as in the factor attribution report in Figure 19.1, we can generate a variance analysis report using the PACE infrastructure. A screen shot of the first page of the actual report is shown in Figure 19.2? As outlined in the methodology section, there is no model associated with attribution by industry grouping. The only required input is the industry and sector classification. These classifications may be provided by vendors such as Russell or Standard & Poor's, or they may be proprietary to the portfolio management team. In this analysis, the 121 basis point outperformance over the review period is comprised of -713 basis points of underperformance related to overweight stocks and 834 basis points of outperformance related to underweight stocks. This particular portfolio manager was helped more by the stocks he or she underweighted performing even worse than the stocks he or she overweighted in a down market-the total return on the benchmark over the period was down 17.28 percent. The section below the return summary shows the contributions for various sectors over the period. Finance, for example, had an average active weight of -1.76 percent over the period. Given that the sector had a negative total return, this contributed 59 basis points to the overall excess return of the account versus its benchmark. 7For illustration purposes we do not show the full report, which provides attribution at the stock level for both securities held in the portfolio and those which are not but are components of the benchmark portfolio.