Friday, January 9, 2009

AIM Equity Fund still 'growth' tilted

The AIM Equity Fund (small cap) has tilted toward growth stocks since its inception in September 2005 - despite its 'sector neutral' weighting mandate. As of the end of 2008, almost half of the holdings in the AIM Equity Fund were classified as growth stocks according to Morningstar (see Style Breakdown chart). Given that the benchmark (Russell 2000) and the investment policy statement are small cap blend or core orientated - the relevant questions are:

1) Is this a concern given the benchmark and IPS?

2) Why do you think that the AIM Equity Fund has had a consistent small cap tilt?

3) What, if anything, should be done to bring the fund into balance?

Interestingly, the AIM Equity Fund has a 0.93 beta relative to the R2K and a significantly higher dividend yield -- hardly 'growth' type measures.

Please feel free to voice your thoughts and opinions about this issue. The AIM students in the Class of 2009 and 2010 will be watching and also weighing in on this topic; however, we are interested in hearing from the AIM alumni and other viewers of this site.


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