Question

You have each been assigned a sector of the economy to develop a sector based mutual fund.

1. What is your sector, and do you expect your sector to outperform the S&P500 over the next 2 months? Why or why not?( I was assigned to Industrial Machinery & Equipment,SIC Code:35)

2.Do you expect that the companies you have chosen for your fund will outperform the sector in general over the next 2 months? Why or why not?

Answer 1

1. My sector will be technology oriented which will have a significant exposure into digital technology which are helpful in carrying day to day work and are consumer oriented.

Yes I expect my sector to outperform the index as it has the composition of stocks which are still functional in lockdown and have seen an increased network traffic.

2. Yes, I have chosen companies like Amazon, Netflix, Zoom and Apple and these companies have a significant exposure to online digital traffic and they will be generating more of the income as people are advised to carry their work from home.

It can been seen that Amazon and Netflix along with Zoom has already hit 52 week high in such troublesome market where the index has been down more than 20 percent.

I expect my companies to even outperform the sector as these are consumer oriented digital companies and are seeing an increase in their income during the lockdown phase and this phase is expected to continue so these companies can continue to outperform.