The fund primarily invests in the stocks of companies with poor earnings performance that are out of favor with the market and appear to be influenced by investor behavioral trends. Stocks are selected on the basis of company analysis by Grasmere’s analysts. The fund uses sector overlays to control risk.
Fund A uses a combination of the bottom-up and top-down approaches. The selection of stocks based on company analysis is a bottom-up approach, whereas the use of overlays to control risk is a top-down approach.
What does it mean the fund uses sector overlays to control risk?
If it invests in companies in the tech and healthcare industries. How does it use sector overlay to control risk?