Ch.10 · Risk Measures and Ratios · easy
What is 'sector allocation' analysis in mutual fund portfolios?
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EXPLANATION
Sector allocation analysis examines how a fund distributes investments across sectors (IT, BFSI, pharma, FMCG, etc.). By comparing sector weights to the benchmark, investors can see where the fund manager is 'overweight' (conviction bets) or 'underweight' (avoiding). High deviation from benchmark sector weights indicates more active management and higher active risk.
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