Group 1 - The report emphasizes the importance of public fund managers focusing on performance benchmarks to prevent "style drift" and create excess returns while controlling tracking error [10][11][28] - The report explores quantitative strategies from the perspective of active equity fund managers to reduce tracking error without affecting excess returns [10][28] - The report highlights that industry neutralization strategies can effectively reduce portfolio deviation from benchmarks while ensuring excess returns are not impacted [28][60] Group 2 - Industry neutralization strategies ensure that the industry allocation of the portfolio matches that of the benchmark index, maintaining the relative proportions of stocks within existing industries [16][28] - The report presents two methods for industry neutralization: one based on CITIC's primary industry classification and another based on industry clustering, each with its advantages and disadvantages [28][60] - The performance metrics for a fund applying industry neutralization show a reduction in annualized tracking error from 12.07% to 8.17%, with an increase in annualized excess return from 4.89% to 5.26% [20][28] Group 3 - Style neutralization strategies involve recalculating stock weights to ensure the portfolio's exposure to style factors aligns with the benchmark [29][60] - The report indicates that the effectiveness of style neutralization is limited, with some funds experiencing increased tracking error after optimization [29][61] - The report suggests that the complexity of the Barra_CNE5 multi-factor risk model may contribute to the ineffectiveness of style neutralization, as it includes various factors beyond style [37][61] Group 4 - The "Core-Satellite" strategy allocates a percentage of the portfolio to replicate the benchmark index while allowing for active management of the remaining portion to generate excess returns [40][60] - The report recommends a core allocation between 30% and 50% to balance benchmark tracking and management flexibility [41][60] - The report discusses sampling methods to replicate index performance, with the stratified sampling method showing the best results in terms of tracking error and excess returns [48][49]