Style Picking

When active fund managers assume their fund's investing style will underperform, they often abandon their stated strategies to chase the returns of other investment styles. For example, when small company fund managers forecast a slump in small company stocks, they may start buying large cap stocks in hopes of beating small cap benchmarks. As you will see, more than half of actively managed funds utilize investments that do not reflect their stated objectives.

Step 6Standard and Poor'sSteven SyreSteve BaileySECBoston Globe