Hi all, I have one question which is in Schweser book 3. I am not quite understand the meanings of "If the manager does not have an opinion about an index stock in full blown active management, she doesn’t hold the stock. If the manager does not have an opinion about an index stock in a stock-base enhanced indexing strategy, she holds the stock at the same level as the benchmark. " I would appreciate of your help!
I am a full-blown active manager…I don’t know anything about BSC. I don’t know if it is undervalued (long position) or it is overvalued (short position). I just don’t know. So I don’t have a position (long or short). I am an indexer. I don’t know anything about MSFT, but MSFT is in the index and it make up 2% of the index…well I need to have 2% of MSFT in my index fund if I want to minic the index. Make sense?
Make sense, thanks a lot!