Equity Style Box

AAA

DEFINITION of 'Equity Style Box'

A visual representation of the principle investment characteristics of stocks and stock mutual funds. The style box was created by Morningstar and is a valuable tool for investors to use to determine the risk-return structures of their stocks/stock portfolios and/or how these investments fit into their investing criteria

Also known as a "stock style box".

Equity Style Box

INVESTOPEDIA EXPLAINS 'Equity Style Box'

An equity style box is comprised of nine squares, or categories, with the investment features of stocks/stock mutual funds presented along its vertical and horizontal axes.

For stocks and stock funds, the horizontal axis is divided into three investment style (objective) categories: value, blend (a value/growth mix) and growth. The vertical axis is divided into three company-size (based on market capitalization) indicators: large, medium and small.

A stock investor looking for relative safety would confine his or her stock or stock fund investments to the large category for company size, combined with selections in the value and blend in the investment style categories. For a risk taker, the category combination of small company (small-cap) and growth will provide a high-risk, high-return opportunity.

RELATED TERMS
  1. Equity Fund

    A mutual fund that invests principally in stocks. It can be actively ...
  2. Style Box

    Created by Morningstar, a style box is designed to visually represent ...
  3. International Equity Style Box

    A visual representation of the principal investment characteristics ...
  4. Fixed-Income Style Box

    Created by Morningstar, a fixed-income style box is designed ...
  5. Fund Category

    A way of differentiating mutual funds according to their investment ...
  6. Bear Fund

    A mutual fund designed to provide higher returns when the market ...
Related Articles
  1. How To Pick A Good Mutual Fund
    Mutual Funds & ETFs

    How To Pick A Good Mutual Fund

  2. Which Mutual Fund Style Index Is For ...
    Mutual Funds & ETFs

    Which Mutual Fund Style Index Is For ...

  3. Understanding The Mutual Fund Style ...
    Mutual Funds & ETFs

    Understanding The Mutual Fund Style ...

  4. Too Many Mutual Funds?
    Retirement

    Too Many Mutual Funds?

comments powered by Disqus
Hot Definitions
  1. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  2. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  3. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  4. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
Trading Center