Investment advisors make investment decisions based on their own decision-making principles. This is called a “philosophy” or “approach”. They do this to implement an investment process that the respective firm believes in and is applied consistently and over long periods of time. Most notable “styles” are value, growth, international, smallcap value or growth, large-cap value or growth, and mid-cap value or growth. A good investment manager will not stray from their particular discipline due to market circumstances, but will stay true to it over time.

Industry studies have characterized these styles of investment management and have also determined that different styles of equity management will perform differently at the same moment in time. It is for this reason that a well-diversified portfolio will deploy multiple managers with diff erent styles to assist in reducing volatility, and therefore more effectively manage investment risk. When allocating capital to a single manager with one "style" the investor can expect more relative volatility than having capital allocated to more than one manager with each having different "styles".