What is “style drift?” Does it matter?

256px-KS_pepperoni_pizzaStyle drift is when what you get isn’t what you thought you were getting. This typically happens with actively managed mutual funds. True indexed funds may not experience this, although the index itself may drift between styles as the companies within the index change characteristics.

Market based (also called passive) indexed style funds also are designed to minimize many of the other narrowly defined indexed fund drawbacks. The below short article explains.

 

More information on a global market based approach.

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In the interest of disclosure: I do use DFA sub-managed SA Funds with most clients (not a fund requirement, but a business decision I’ve made for clients). This blog is not a solicitation; simply an explanation of the basic philosophy and approach of the funds.

Photo source: By BrokenSphere (Own work) [CC-BY-SA-3.0 or GFDL], via Wikimedia Commons

About Larry Frank, Sr.

Larry R Frank Sr., MBA, CFP®, is an experienced financial advisor and a published author on Retirement Planning Research. Have a financial question? Click Here to Ask Larry

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