Question

1. A portfolio manager rotates through the equity sectors based on the US business cycle. According to your lecture slides and your understanding of where the US economy is currently at in the business cycle, this portfolio manager would be least likely to buy stocks in which of the following sectors:

1. Energy
2. Utilities
3. Industrials
4. Consumer Staples
5. Information Technology

2. Equities in the US have enjoyed a sustained bull market for over ten years. Over the past 10 years, the Information Technology sector has consistently outperformed other sectors in the SP500. Today, the Information Technology sector most likely has a much smaller weight in the SP500 index than it did ten years ago. One implication of this change in Information Technology’s sector weight is that if the sector falters in the near future, the SP500 will likely struggle to make new all-time highs. Evaluate the underlined words in italics. True or false?

1. True
2. False

Answer 1

C) IS correct answer - Industrials & Industrials selders tend to a outperform in the early cycle State of the economy glike as Interest Rate Inflation etc. The Bussin cyclo com can therefore be a critical determinat of the equity market Return and performance of equiry selter. ans- THUE (2) sa concentrated, high quality growth approach takan than come with significant share price valatility Run the risk of exit at precisely wrong ng moment which can result in detrimental impact on Returns