If you want to outperform the crowd, you must do things differently from the crowd, said John Templeton, one of the best stock pickers of the past century. In the multimanager arena, how you diversify between different investment styles in a fund of funds (FoFs) is one way of doing things differently. Ensuring that underlying managers have complementary investment styles can reduce short-term investment risk, without compromising long-term returns. Avoiding scenarios where investment strategies are highly correlated and will underperform — or outperform — in the same market conditions also promotes effective diversification. Traditionally, equity investment styles have been broadly divided into either growth or value. Growth investors typically invest in companies whose earnings are expected to grow at an above-average rate compared to their industry or the overall market. The focus of this style is to grow investors’ capital. Value investing is a strategy where stocks trading for l...

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