When it comes to mutual fund investment styles, value and growth often attract much of the attention, but equally important are the top-down and bottom-up approaches.

The top-down style looks at economic conditions and trends, examining interest rates, inflation, government policies, economic growth and other factors. Next, money managers identify specific regions and sectors they believe are poised to outperform in the current environment. Choosing companies is last.

The bottom-up style focuses on the companies, not the economy. Within a given geographic region, analysts review companies’ financial statements, management teams, competitive ability, growth prospects and stock value.

Each style has its advantages. With top-down, selected companies may have an edge due to the prevailing or expected economic trends. The bottom-up approach allows managers to uncover promising companies regardless of the economy or their sector.

Some mutual funds combine both styles. For example, a fund manager may predominantly take a bottom-up approach to list potential companies and then consider the broader economic conditions to help guide their selection.