Bottom Line

Wise investors avoid the pitfalls of style drift in two ways. First, they resist the temptation to overweight or underweight asset classes that may be touted or spurned based on speculation or hype from so-called experts or the financial media at any particular time. Second, they steer clear of actively managed funds because these are also notorious for style inconsistency in an attempt to beat the market. Instead, wise investors avoid the perils of style drift by holding a consistent allocation of index funds, permitting them the full benefits of a risk appropriate investment in the global markets.

Step 6Style PurityRisk Capacity