Vol. 5, Issue 2, Part A (2019)

Abstract
Different experts in finance have also documented that a specific and continuous strategy or style of the investors or fund managers also result into inefficiency of the stock market. Sharpe (1988, 1992) proposed “Style Analysis” as a factorial model which reflects mutual fund strategies without requiring data on the historical portfolio holdings. Sharpe opined in this model that it is style parameters of various fund managers which generates extra returns on a portfolio. Style plays a crucial role specially when a fund is managed by multi-managers and consistency in their styles directly influence the benefits expected from that fund. Furthermore, style consistency is critical in allowing a centralized manager to construct a blended portfolio with the ex ante desired risk-return properties. If growth (value) managers do not remain faithful to growth (value) stocks over time and roll their portfolio away from stocks belonging to their self-stated style specialization, then this is going to lead to an increase in the potentially diversifiable risk in the overall portfolio to the extent that their active positions correlate with other managers. This style drift could have adverse effects on the underlying fund’s performance, risk and other fund attributes. In present time, the successful Asset Management Companies have developed investment strategies on a set of beliefs that narrate what is considered as ‘Best Investment’ by them.