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Providing Appropriate Investing Level to Make Sector Funds

Author Affiliations

  • 1 Department of Industrial Engineering and Management Systems, Amir Kabir University of Technology, IRAN

Res. J. Recent Sci., Volume 4, Issue (12), Pages 114-118, December,2 (2015)

Abstract

This research paper deals with an accurate quantitative definition for sector funds. This concept has not met the attention that it deserves yet and authors usually present it two-sided in the literature. This research is looking for a certain percentage on which if a mutual fund invests on one specific sector above that percentage, based on history data, the mutual fund will be considered as the sector fund. We categorize the funds into two groups: sector funds and other funds. Consider each fund in each group as an asset with unique return and risk, and for each group makes fund of funds by Markowitz. We propose to compare the average ratio of risk to return between two made funds based on the primary six months of studied period in order to find the certain percentage. In order to verify the validation, the average ratio of risk to return between two made funds based on the last six months of studied period are compared. The results show that the certain percentage is accurate.

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