MUTUAL FUND STYLES

Mutual funds are typically grouped by their investment objectives or t he 'style' of their managers. We propose a new empirical to the determ ination of manager 'style.' This approach is simple to apply, yet it c aptures nonlinear patterns of returns that result from virtually all a ctive portfolio management styles, Our classifications are superior to common industry classifications in predicting cross-sectional future performance, as well as past performance, and they also outperform cla ssifications based on risk measures and analogue portfolios. Interesti ngly, 'growth' funds typically break down into several categories that differ in composition and strategy.