Style drift

A manager moving away from the style or strategy it was hired for, such as a value fund buying growth stocks. It leaves the client with exposures it did not choose.

Where you will meet it

Style drift appears in 2 learning outcomes on the CFA syllabus. A few of them:

• Discuss what to watch when overseeing an alternatives programme after it is in place
  CFA Level III · Portfolio Construction

  “At manager level, watch for style drift, changes in key personnel, organisational or ownership changes, operational weaknesses and alignment of interests through fees.”

• Show firm command of the Code and Standards by applying them to professional integrity cases under Standard III, Duties to Clients
  CFA Level III · Ethical and Professional Standards

  “Under III(C), each position is judged against the IPS and the whole portfolio, and a pooled fund must be run to its stated mandate, so style drift away from it is a breach.”

Practise it

• Today's practice question One question, with every wrong option explained.
• Free Level I diagnostic test Twelve questions that show which topics to start with.
• Free finance calculators Check your arithmetic on the exam's core formulas.

All terms beginning with S · Glossary