What is "Style Drift"?
- 401(k) and other plans offer participants a menu of investment alternatives.
- Participants are advised of the investment parameters (or style) followed by the fund manager, e.g., large cap growth.
- If, in practice, there is a marked deviation from the stated investment parameters (e.g., the manager begins following a “value" style), "Style Drift" may occur.
- Is the option still appropriate to include in the menu of investment alternatives?
- How does the style drift impact the menu? Does the menu still provide a broad array of diversified alternatives?
- Are participant communication materials (e.g., fund fact sheets) still accurate or do they need to be updated to reflect the style drift?