A balanced portfolio invests in global equities and bonds. The following valuation data is provided:

holding	asset class	valuation as of end of month 1	valuation as of end of month 2
A	Equity	1000	1280
B	Equity	2000	1930
C	Bonds	1500	1520
D	Bonds	1800	1840
Cash	Cash	300	145

Note that the increase in valuation of A is due to 1) market performance and 2) a purchase with a transaction value of 200 already including transaction fees.

The cash balance at the end of month 2 is the result of the cash balance at the beginning of the month, a cash inflow of 50 (new subscriptions), a management fee of 5, the additional purchase of A (see above) and interest income.

Assume that all transactions occur at the end of the month, i.e., shortly before the end of month 2. The portfolio is benchmarked against a 30/70 (equity/bonds) benchmark with equities earning a return

of 50 bps and bonds a return of 1.6%.

b) Show that the portfolio yields a performance of 1 %.