As opposed to investing in individual securities and bonds, investors can decide to make portfolio allocation decisions by placing their savings in broad categories of securities, such as "large-cap", "growth", "international", or "emerging markets". This approach to investing is termed style investing.

Style investing is of interest to economists because it serves as a useful framework for identifying anomalous price movements in stocks, such as those observed when a stock is added or removed from the S&P 500 index.

References

• Barberis, Nicholas and Shleifer, Andrei, Style Investing, 2003, J. Financial Econ., 68, 161-199.