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5. You have been asked to evaluate returns from your commercial real estate investment fund (Bluestone Fund) against an industry benchmark index to determine how successful your active investment strategy has been. Specifically, a potential client wants you to compare the perfor- mance of your portfolio strategy against a passive strategy of simply investing based on the same proportions of properties and locations comprising the index. During the most current quarter, the following information has been provided to you based on property type and location: A. Bluestone Fund Industry Index % of % of Fund Weighted Index Weighted Property Type Value Return Value Return Return Apartments 20% 35% 12% Hotel 0 10 14 Industrial 30 Office 10 Retail 15 Total 100.0 Location Type Return 14.0% 16.0 10.0 4.0 10.0 2.8% 0.0 5 0.5 35 1.4 40 4.0 100.0 8.7 Bluestone Fund % of % of Fund Weighted Index Weighted Value Return Return Value Return North 30% 11% 3.3% 35% 4.2% South 35 12 4.2 15 2.1 East 10 0.7 25 8 2.0 West 25 0.5 25 6 1.5 Total 100.0 - 8.7 100.0 9.8 a. Use the Brinson-Hood-Beebower (BHB) approach to calculate the extent to which the Bluestone Fund is over- or (under)weighted by property type relative to the industry index. b. Use the Brinson-Hood-Beebower (BHB) approach to calculate the extent to which the Bluestone Fund is over- or (under)weighted by location/region relative to the industry index. c. To what extent was the superior performance by Bluestone attributable to property selection versus allocation in (a)? B. 00 00 | 8 6 8 - Industry Index Return 12% 14 4.2% 1.4 2.4 0.6 1.2 9.8 5. You have been asked to evaluate returns from your commercial real estate investment fund (Bluestone Fund) against an industry benchmark index to determine how successful your active investment strategy has been. Specifically, a potential client wants you to compare the perfor- mance of your portfolio strategy against a passive strategy of simply investing based on the same proportions of properties and locations comprising the index. During the most current quarter, the following information has been provided to you based on property type and location: A. Bluestone Fund Industry Index % of % of Fund Weighted Index Weighted Property Type Value Return Value Return Return Apartments 20% 35% 12% Hotel 0 10 14 Industrial 30 Office 10 Retail 15 Total 100.0 Location Type Return 14.0% 16.0 10.0 4.0 10.0 2.8% 0.0 5 0.5 35 1.4 40 4.0 100.0 8.7 Bluestone Fund % of % of Fund Weighted Index Weighted Value Return Return Value Return North 30% 11% 3.3% 35% 4.2% South 35 12 4.2 15 2.1 East 10 0.7 25 8 2.0 West 25 0.5 25 6 1.5 Total 100.0 - 8.7 100.0 9.8 a. Use the Brinson-Hood-Beebower (BHB) approach to calculate the extent to which the Bluestone Fund is over- or (under)weighted by property type relative to the industry index. b. Use the Brinson-Hood-Beebower (BHB) approach to calculate the extent to which the Bluestone Fund is over- or (under)weighted by location/region relative to the industry index. c. To what extent was the superior performance by Bluestone attributable to property selection versus allocation in (a)? B. 00 00 | 8 6 8 - Industry Index Return 12% 14 4.2% 1.4 2.4 0.6 1.2 9.8