Different investments styles

An investment style is somewhat underestimated nowadays, yet gaining a basic understanding of the major investment styles is one of the fastest ways to make sense out of the thousands of investments available in the market today, and the mere knowledge of these styles may change the way you look at trading.

The main investment styles may be broken down into three fields, namely;

1) active vs. passive management,

2) growth vs. value investing, and

3) Small cap vs. large cap companies.

Active or Passive Management

In determining investment style, an investor should first consider the degree to which they believe that financial experts can create greater than normal returns. Investors who want to have professional money managers carefully select their holdings, will be interested in active management. Actively managed funds typically have a full time staff of financial researchers and portfolio managers who are constantly seeking to gain larger returns for investors. Since investors must pay for the expertise of this staff, actively managed funds typically charge higher expenses than passively managed funds.

Some investors doubt the abilities of active managers, as not all would be...