What is a style index?

It is an index designed to provide a yardstick for the performance of portfolio managers on a particular stock market pursuing a particular investment style: growth investing, income investing, value investing and the rest.

Where have you heard about style indices?

As an investor, you may have been told that a fund in which you have invested has outperformed the relevant style index. Your financial adviser may draw your attention to how well or badly a fund in which you are interested has performed against the style index.

What you need to know about style indices...

All investment funds have a style, whether focusing on capital growth, on income, on value or on some other focal point. Style indices give an idea for each stock market as to how well a portfolio constructed in each style ought to be performing. Not only are they a standard against which actively managed funds in that style can be measured but investors can buy passive tracker funds that simply mimic the style index in question, giving them low-cost access to that particular investment style.