ABSTRACT
This chapter describes a methodology for identifying investment opportunities in segments of the global equity markets. These market segments may be defined in any convenient way, by parsing the names in the universe into economic sectors. It then delineates two different applications of this approach namely, sector rotation and style rotation. The methodology recommended in the chapter can be used in two important ways. One is to provide a direct method of adding value to a portfolio by identifying groups of equities that can be overweighted or underweighted to enhance returns. The second use of the information developed by the means that outlines to gain insight into which factors are undervalued in the marketplace at any given time, and thus should be emphasized in an equity portfolio, even if the names used in the analysis are not necessarily the vehicles used to implement the strategy.
