Understanding strategies and styles of investing

Types of investment strategy

At a high level, the most common strategies for investing are:

Growth investing

Growth investing focuses on selecting companies which are expected to grow at an above-average rate in the long term, even if the share price appears high. Types of growth investments can include smaller companies, emerging markets, recovery shares, internet and technology stock.

Value investing

This strategy relies on the market overreacting to good and bad news, resulting in extremes of stock price movements which don’t necessarily match a company's long-term outlook. Investors buy stock when the price is low and sell when it increases.

Quality investing

Quality investing focuses on companies with outstanding quality characteristics such as credibility of the management or stability of the balance sheet. A quality portfolio can contain both growth and value attributes.

Index investing

Index investing is also known as passive investing; focusing on creating a portfolio of assets designed to match the returns of a market index. The assets held by the portfolio will be entirely defined by the components of the selected index.

Buy and hold investing

Buy and hold investing focuses on purchasing securities and holding these for a long period of time (usually many years) to achieve returns.