How does holdings-based style analysis categorize securities?

Holdings-based style analysis categorizes securities by their characteristics and aggregates results. This methodology involves analyzing the actual securities in a portfolio, considering key attributes such as market capitalization, sector, and style (value vs. growth), among others. By examining the composition of a portfolio, holdings-based style analysis helps determine how the asset allocation aligns with a particular investment style. This approach contrasts with other analyses that might rely solely on historical performance metrics or subjective measures of investor sentiment.

In holdings-based style analysis, the focus is on categorizing based on the intrinsic traits of the assets rather than external or qualitative factors, making it a highly objective approach. Through aggregation of these characteristics, investors can derive insights about the overall style exposure of the portfolio and better understand how it aligns with their investment strategy.