Financial Glossary: Investment Style


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Investment Style

Investment Style

Investment style refers to different style characteristics of equities or Bonds within a given investment philosophy.

The style is often determined by the temper and the beliefs of the investor. Theory would favor a combination of big capitalization, passive and value. Of course one could almost get that when investing in an important Index like S&P 500, Euro-Stoxx or the like.

In the context of stock Mutual Fund investing, refers to using one of three possible approaches -- investing in value stocks, growth stocks, or a blend of value and growth stocks - to create a fund Portfolio.

Value stocks are considered to be less risky than growth stocks, which makes the blend investing style a compromise of the two. Investment style, along with company size, is the basic determinant of a fund Portfolio's Asset allocation and Risk-return parameters.

Fund investors should look for a High degree of consistency in a fund's investment style. Frequent changes could be an indication of the fund's investment manager chasing performance, which surely involves increasing Risk.

Posted by Privatebanking.com

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