Tilt Fund

Your neighbor has a Mustang. You’re tired of getting blown away during Saturday night drag races on your street. You really want to beat that Mustang.

You start by buying the same Mustang your neighbor has. But then you make additions in order to beat it. You replace the engine with something you bought off a used jet. You add a nitrous booster. And, of course, you paint flames along the doors, if only for intimidation value.

The same premise applies to a tilt fund. It's an investment strategy that starts by mimicking an existing index.

You want to create a tilt fund off the Dow Jones Industrial Average. You'll start by buying all 30 Dow components in the same weightings as they exist in the actual index. You've basically replicated the Dow index...the equivalent of buying the same car as your neighbor.

Now it's time to start tilting. You monkey with the components to get an edge over the actual Dow. You begin adding other stocks. Maybe a tech high-flier you like. Maybe something from a sector you think is underrepresented in the actual index.
In the end, you have something that's mostly a match for the Dow. But (hopefully), if you're good at picking the extras, you have a fund that will outperform the index on which it is based. You'll be able to blow that old Mustang off the line and win the respect of your neighbors.