Tuesday, July 24, 2007

Broad Style of Fund Management

Below are Broad Styles of Fund Management. See which style suits you most.

•Value- Here, the manager looks for undervalued stocks - stocks that are worth more than comparable stocks. The theory is that the market will eventually realize the value of these stocks and the price will go up.

•Growth- The manager picks stocks that are expected to grow much faster than comparable stocks. They may or may not be value stocks.

•Momentum- The manager buys stocks that are quickly rising - even if they are grossly overpriced. The basic idea is to buy and sell quickly.

•Bottom-up.-The manager picks stocks based on fundamental analysis of the company such as low price-to-earnings ratio, high book value etc.

•Top-down- Here, the manager looks for sectors in the economy that are doing well (or are expected to do well) and then picks stocks within those sectors.

•Sector rotation- Here, the top-down manager switches the investments to different sectors of the economy or industry based on analysis of economic and technical indicators.                                                              

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