Explain how style analysis, both holdings-based and returns-based, supports the choice of investment managers

Returns-based style analysis regresses a manager's returns on style indexes, with weights constrained to be non-negative and to sum to one, to infer an effective style mix. It needs little data, is hard to manipulate and allows easy comparison, but it relies on the index set chosen, lags style changes and can mislead for concentrated or dynamic portfolios. Holdings-based style analysis classifies each position by characteristics such as size, value or growth, and sector; it is more precise and detects drift sooner, but needs holdings data, depends on the classification method and can be distorted by window dressing. In selection, both confirm that actual style matches the manager's claims, identify a suitable benchmark, reveal drift and show how the manager fits alongside others.