A peek into different investment methods

Top-Down Investing
This is a macro level approach to investments. In this method, a fund manager looks at the economic, social, cultural and political situation of the country to determine any themes or elements that can define the growth of certain sectors. Once a sector is determined, the fund manager then analyzes the performance of various companies in that sector and pick stocks that look promising.

For example, if the fund manager, on analysis, finds that India will have a high number of 30-40 year olds in the next 2-3 years, then the 30-40 year old market segment becomes the theme he/ she chooses to follow. The fund manager will then look at sectors which cater to this market and analyze stocks in those sectors.

Since the market is initially analyzed at a macro level and then drilled down to individual stocks, this method is known as a Top-Down investment method.