The sector allocation of two funds and their benchmark was obtained on the 1st of July...
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The sector allocation of two funds and their benchmark was obtained on the 1st of July and are as follows: Sectors Financials Consumer cyclicals Consumer non-cyclicals Total Benchmark 49% 35% 16% 100% Fund 1 49% 30% 21% 100% Fund 2 45% 15% 40% 100% Based on the above asset allocation and assuming that these asset allocations are established for the next 3 months, please answer the following questions: a) Explain: (i) if the funds in the table above (Fund 1 and Fund 2) are managed actively or passively. (ii) Now explain which fund will have higher Tracking Error. b) Explain which fund is optimistic regarding the economy (expects the economy to improve). The sector allocation of two funds and their benchmark was obtained on the 1st of July and are as follows: Sectors Financials Consumer cyclicals Consumer non-cyclicals Total Benchmark 49% 35% 16% 100% Fund 1 49% 30% 21% 100% Fund 2 45% 15% 40% 100% Based on the above asset allocation and assuming that these asset allocations are established for the next 3 months, please answer the following questions: a) Explain: (i) if the funds in the table above (Fund 1 and Fund 2) are managed actively or passively. (ii) Now explain which fund will have higher Tracking Error. b) Explain which fund is optimistic regarding the economy (expects the economy to improve).
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ANSWER a i FUND 1 is managed passively because weights are in the sam... View the full answer
Related Book For
Probability and Statistical Inference
ISBN: 978-0321923271
9th edition
Authors: Robert V. Hogg, Elliot Tanis, Dale Zimmerman
Posted Date:
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