Total return = ∑ (W_i × R_i)

where:
W_i = weights of each individual asset class
R _i = returns of each individual asset class

Blakely decided to alter the asset allocation weights to 50% stocks and 50% cash. Since the actual total return for the Miranda Fund was 10.2% and the cash return was 2%, then the asset class return for stocks is:

0.102 = [(0.50 × R_i) + (0.50 × 0.02)]

0.0920 = 0.50 R_i

R_i = 0.1840 = 18.4%

Therefore for the Miranda Fund, the asset class returns for stocks and cash are 18.4% and 2% respectively.

The benchmark S&P 500 had constant weights of 97% stocks and 3% cash. Since the actual total return for the S&P 500 was –22.5% and the cash return was 2%, then the asset class return for stocks is:

–0.225 = [(0.97 × R_i) + (0.03 × 0.02)]

–0.2256 = 0.97 R_i

R_I = –0.2326 = - 23.26%