A
mutual fund that tracks an
index of multiple
sectors where the fund maintains the same ratio of sectors with respect to the index, but
actively manages the individual
securities within each sector. For example, suppose an index consists of
stocks where 25% of the companies are in manufacturing, 25% in
retail, and 50% in financial services. The
money managers of a sector neutral index fund will see to it that the fund consists 25% of manufacturing stocks, 25% of retail, and 50% of financial services. However, the individual stocks within each of those sectors in the fund will change from time to time. A sector neutral index fund seeks to have a higher
return than the
benchmark index. See also:
Enhanced indexing.