Equity Investment Funds
Equity Investment Funds | Various Strategies
Four primary styles of equity investment management based on the criteria that money managers use to select stocks: value, growth, market-oriented, and small capitalization.Value managers focus on income-producing companies and/or securities whose price is low relative to one or more valuation factors, such as earnings or book value. The low price may reflect negative sentiment toward the company, undervalued assets, or a temporary setback. There are two substyles within this category: low P/E and yield. Low P/E value managers emphasize stocks that have below-average multiples of trailing, forecasted, or normalized earnings. In contrast, yield value managers focus on stocks with above-average dividend yields. As a result, their portfolios tend to have a larger capitalization bias and sector concentration than those of low P/E value managers.
Growth managers concentrate on companies with outstanding prospects for future growth. The substyles within this category are: consistent growth and earnings momentum. Consistent growth managers seek companies with a long-term record of consistent, above-average profitability or earnings growth. Earnings momentum growth managers, in contrast, focus on near-term acceleration of earnings and more volatile growth rates.
Market-oriented managers select stocks representative of the broad equity market. While some may take meaningful positions on growth or value stocks from time to time, these managers exhibit no strong consistent bias to either style.
Small capitalization (small cap) managers concentrate on stocks of smaller companies, such as those listed in the Russell 2000® Index. Small cap managers may use either a growth or value approach to security selection.
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