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By Staff Reporters
Sponsor: http://www.MarcinkoAssociates.com
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Sector allocation in an equity or fixed-income context refers to a portfolio managers’ decision to invest in a particular broad market sector or industry.
A sector allocation or breakdown can help an investor observe the investment allocations of a mutual or other fund. Fund companies regularly provide sector reporting in their marketing materials. Sector investing can influence investments in the fund. A fund may target a specific sector such as technology, or seek to diversify among many sectors.
Some funds may have restraints on sector investments. This may occur with environmental, social, and governance (ESG) focused funds. These funds seek to exclude industries or companies that their investors consider undesirable for various reasons such as tobacco producers or oil exploration companies.
The ultimate sector allocation decision is likely to combine macroeconomic views with judgments about inter-sector and intra-sector relative values, among other reasons.
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Filed under: "Ask-an-Advisor", Financial Planning, Funding Basics, Marcinko Associates, Portfolio Management | Tagged: bonds, diversification, ESG, finance, fixed income, Investing, Marcinko, Mutual Funds, personal-finance, portfolio manager, sector, sector allocation, stocks |
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