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Style Indices

Style indices track the performance of a group of stocks categorized by specific investment styles, such as growth or value. These indices help investors understand how stocks with similar characteristics—whether based on earnings growth, market capitalization, or other factors—are performing relative to broader markets. Common examples include growth and value indices, which separate stocks into groups based on their potential for growth or current market undervaluation.

Example

The Russell 1000 Growth Index is a style index that tracks the performance of U.S. large-cap growth stocks, which are expected to show higher future earnings growth.

Key points

• Tracks performance based on investment styles like growth or value.

• Helps investors compare the performance of specific styles with broader markets.

• Commonly used for evaluating growth, value, or blended strategies.

Quick Answers to Curious Questions

They help investors track the performance of stocks with similar characteristics, such as growth or value, and compare them to the broader market.

Growth indices track companies expected to grow earnings rapidly, while value indices focus on stocks considered undervalued relative to their intrinsic worth.

They allow investors to allocate investments across different styles, helping to reduce risk and target specific return profiles.