Strategies
STYLE INDICES
Construction | Large Cap (PDF coming soon) | Mid Cap (PDF coming soon) | Small Cap (PDF coming soon)
Everyone has experienced the cyclicality of growth and value managers. But why is it that not all value managers, for example, move in lockstep with one another? Through years of research we have identified another factor, a third dimension to style that is so powerful, it deserves to be a style classification in its own right.
This factor is the stability of a stock’s past returns relative to other stocks and is the basis for our Stable and Variable style groups. Both these groups offer a sharp distinction in performance. Categorizing stocks on the basis of the stability of returns represents a powerful extension of the conventional value and growth framework, enhancing the ability of our indices to distinguish growth from value stocks.
Failure to consider this factor can lead to underperformance. We have found that most equity managers are either Stable Value or Variable Growth, thereby leaving two significant style gaps – Stable Growth and Variable Value – that can be filled with our indices to improve the diversification of overall equity portfolios.
