What is a requirement for holdings-based style analysis?

Holdings-based style analysis focuses on the actual securities within a portfolio to determine its investment style and characteristics. For this analysis to be effective, it is essential to have a security database that provides specific characteristics for each asset held in the portfolio. This database typically includes information such as market capitalization, sector classification, and valuation metrics. By analyzing these characteristics, investors and analysts can ascertain whether the portfolio is, for example, growth-oriented, value-oriented, or following a blend strategy.

Other potential requirements, such as records of market trends, a historical profile of the fund manager, or real-time trading data, do not directly contribute to the holdings-based analysis itself. While market trends might provide context for why a particular style may perform differently over time, and understanding the manager's history can give insights into their decision-making process, the core of holdings-based style analysis is fundamentally about evaluating the portfolio's actual holdings through their specific attributes. Thus, the existence of a comprehensive security database is crucial for completing an accurate holdings-based style analysis.