Sector Neutral Index Fund

Sector Neutral Index Fund

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.

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sector neutral index fund

A mutual fund that maintains a portfolio with sector weights identical to a particular stock index while attempting to earn returns higher than the index by managing stocks within each sector. A sector neutral index fund is a special kind of enhanced index fund. See also enhanced indexing.