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Which one is not a general factor portfolio building method? Screening out stocks with low factor...

Which one is not a general factor portfolio building method?

Screening out stocks with low factor characteristics

Tilting benchmark weights towards high factor loading stocks

Reversing benchmark weights to build active share
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Answer #1

Reversing the the overall benchmarking index will never be resulting into active portfolio because weights of the the benchmarking index are fixed according to the performance of different stocks and it is not that the stocks who have the minimum exposure are highly active stocks.

Active investment strategies more focused at alignment of the portfolio with the market cycle and changing the portfolio and readjustment of the portfolio according to the market sentiments and it is not about reversing the entire benchmarking index.

Screening out stocks with low factor character and tilting benchmark with towards high factor loading stocks are methods of portfolio building.

Correct answer would be option (C) reversing the benchmark index to build active share.

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