When is an investment considered "out of style" based on style index?

An investment is considered "out of style" when its style index is negative. The style index is a measure of how closely an investment aligns with a specific investment style, which can include factors such as value, growth, or blend. A negative style index indicates that the investment is significantly deviating from its expected style characteristics, suggesting that it does not fit within the defined parameters of its style index.

For instance, if a growth-oriented investment shows performance metrics that align more closely with value characteristics, the style index would be negative. This scenario indicates a lack of style consistency, which investors may interpret as the investment being "out of style."

In contrast, a zero style index would imply that the investment perfectly aligns with its defined style, while a positive style index means that it is even more firmly within that style category. A volatile performance history does not directly indicate whether an investment is out of style, as volatility can occur within any style type regardless of indexing measures. Thus, the negative style index serves as a clear and quantifiable indicator of an investment being out of style.