BENEFITS OF PROPER STYLE CLASSIFICATION OF EQUITY PORTFOLIO MANAGERS - 4-STYLE PORTFOLIOS EXHIBIT THE BEST PERFORMANCE

Institutional plan sponsors routinely employ multiple equity managers, each representing a distinct equity style. The benefits of style dive rsification, however, depend on an accurate classification of investme nt managers. The authors examine various style classification methods, and contrast the portfolio performance associated with each method. T hey find that classification of managers on the basis of exposures to large-cap growth, large-cap value, small-cap growth, and small-cap val ue risk factors provides a simple, effective, and objective trading st rategy for improving portfolio risk-adjusted returns.