1. Tom Cruise wants to compare Alpha equity fund against the S&P 500. Alpha fund uses the idea of Risk Allocation by investing in the same firms as in the S&P 500 but with different allocation. Alpha fund's sector allocation remains the same as the market index (capitalisation weighted). However, the allocation of each firm in each sector is based on equal risk contribution (each firm in a sector will have the same Marginal Contribution to Risk as others firm that sector). Tom has asked you to explain if Alpha fund will have a lower or higher volatility than the S&P500?