Style Drift Illustrated

Style Drift Illustrated

Actively-managed funds often start out as one kind of animal and slowly evolve into something totally different over time. For investors who care about developing asset class portfolios with funds that stay true to their style, this "style drift" is an unwelcome risk.

The graphic below shows the style drift of several popular active funds compared to several DFA index funds. We use the Fama/French Three Factor Model to determine a fund's style from Janaury, 1976 - December 1985 and then again for the period January 1986 - December 1995. As you will see, most of the funds started as small cap funds and drifted to the point where they are now essentially "market" funds.

Click on the graphic to put it in motion

Index Funds Staff