Analyst has determined that the Zenith Fund tends to sell the winners and buy the losers. An examination of the semi-annual holdings of the fund reveals that the best performing assets often are not held in the subsequent six-month period. At the same time the new entrants to the Zenith Fund often were under-performers prior to being added. Consider the strategy or tactic of selling the winners and buying the losers.

A)Explain how this action might be appropriate as a passive portfolio action.(4 marks)

B)Explain why some people might adopt this action as part of an active portfolio strategy.(4 marks)