Final answer:
The contribution of selection within markets to the Razorback Fund's total excess return depends on various factors such as the skill and knowledge of fund managers. It is the portion of the excess return attributable to the managers' ability to select investments that outperform the market.
Step-by-step explanation:
The contribution of selection within markets to the Razorback Fund's total excess return depends on various factors. Selection within markets refers to the process of choosing specific investments within a particular market. In the context of the Razorback Fund, it means selecting specific stocks or securities that contribute to the fund's overall returns.
Market selection strategies can vary, and their impact on the fund's excess return depends on the skill and knowledge of fund managers. If the Razorback Fund's managers are skilled at identifying undervalued stocks or selecting investments that outperform the market, the contribution of selection within markets to the fund's total excess return would be positive. On the other hand, if the managers make poor investment choices or lack expertise in selecting profitable assets, the contribution may be negative.
It's important to note that excess return is the difference between the actual rate of return achieved by the Razorback Fund and the return expected from a benchmark or the overall market. Therefore, the contribution of selection within markets to the fund's excess return is the portion of the excess return attributable to the managers' ability to select investments that outperform the market.