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Explaining performance drivers is fundamental to a fund manager’s investor narrative. While returns, volatility, and benchmark comparisons might open the door, they won’t seal the deal. Besides asking What did you deliver?, allocators are equally interested in knowing how you delivered it. If you are a manager struggling with articulating this part of your pitch, attribution analysis can add the missing layer to your narrative.
Besides being a portfolio diagnostics tool, attribution analysis is a very compelling storytelling device. It allows managers to explain the decisions that led to their performance, whether positive or negative. From an allocator’s point of view, this level of transparency is invaluable, as it helps with distinguishing a manager worth betting on from one riding market tides.
What Attribution Analysis Really Shows
Attribution breaks down your portfolio’s returns into digestible pieces. Did you generate alpha through savvy stock selection? Or was it your sector allocation that delivered the returns? Maybe it was both. Attribution analysis quantifies these drivers, letting you claim credit where it’s due.
But attribution is equally valuable when the numbers don’t look great. Allocators know that all managers face tough quarters, what matters is being good at articulating what happened and why. Was a drawdown the result of poor decision-making, or a calculated risk that didn’t pan out this time? Attribution can help you construct a framework to explain these results.
Finding Your Differentiator
How does attribution analysis fit into the fundraising process? Think of it as your performance resume.
For example, say your portfolio underperformed this summer due to a sector tilt. Attribution analysis can pinpoint whether that tilt was a move in line with your thesis or an oversight. If it was deliberate, and the broader market conditions shifted unexpectedly, you can credibly argue that your process remains sound, even if the results lagged. On the other hand, if the underperformance stemmed from stock selection rather than sector allocation, that’s a different conversation. Either way, you’re showing allocators that you are analytical instead of reactive.
Demonstrating this level of transparency helps managers stand out by moving beyond the surface of a glossy annualized return figure.
What Allocators Want to Hear
Attribution analysis also gives you the ability to speak the allocator’s language. They’re not looking for vague platitudes about “sticking to the process” or “keeping discipline.”
With attribution, you can show:
- Allocation decisions: Were your bets intentional, and did they pay off?
- Stock selection: Did your picks outperform their peers, and by how much?
- Timing: Were you adding value through active adjustments, or simply riding beta trends?
In a fundraising meeting, these specifics can be the difference between a polite “We’ll get back to you” and a serious follow-up conversation. Investors are inundated with pitches, but few managers are willing (or able) to articulate their process at this level.
Your Story in Good Times—and Bad
Even when the numbers aren’t flattering, attribution can make you look better on paper. If you suffered a drawdown, an attribution breakdown might reveal that the underperformance stemmed from a single sector that lagged due to macro conditions, while the rest of the portfolio performed as expected.
By framing this with attribution data, you can explain to investors:
- The specific drivers of the drawdown.
- How those drivers align with your broader strategy.
- What you’ve adjusted, if anything, to navigate similar scenarios in the future.
Allocators don’t expect perfection, but they do expect self-awareness and adaptability.
Fundraising is tough. As one of many, you will need to find a way to stand out. There’s an almost counterintuitive truth about this industry: most managers don’t compete on returns—they compete on the strength of their story. Your performance numbers might get you in the room, but it’s the narrative you build that will keep you there.
When your narrative aligns with the numbers—and when those numbers are clearly supported by quantitative analysis—you demonstrate a level of professionalism and self-awareness that inspires trust. This is how you lay the foundation for lasting, trust-based relationships.
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Kevin Becker is a Co-Founder and CEO of Kiski. Connect with him on LinkedIn here.