1. Mutual Fund Categories
  2. Mutual Fund Style Box
  3. Fund I-Q Number 1: Investing Style
  4. Scoring Investment Style Data

By Richard Loth (Contact | Biography)

Several years ago, Morningstar's Don Phillips invented the so-called "style box," which is now widely used as a reference tool for determining the investment objective, or style, followed by a fund's investment managers. The details of these broad category investing strategies were covered in the previous section.

In summary, an equity style box is divided up into nine, equal-sized boxes in tic-tac-toe fashion. In the nine categories used to classify a fund's investment style, this graphic presentation shows where a stock fund's risk-return characteristics place it compared to other funds. The vertical axis classifies risk by three company sizes and the horizontal axis has three investment strategies. In similar fashion, a bond style box reflects a bond mutual fund's risk-return characteristics by using credit quality (vertical axis) and maturity periods (horizontal axis) to indicate a bond fund's investment style.

Mutual fund reports and literature use style boxes to determine a fund's current investment objective and to track its style over extended periods of time. In the following section, we will discuss how investing styles impact a fund's investment quality.

Figures 1 and 2, below, show the style box for stock and bond mutual funds. (To learn more, read Understanding The Style Box.)

Figure 1


Figure 2


Return to the Main Menu.

Fund I-Q Number 1: Investing Style

Related Articles
  1. ETFs & Mutual Funds

    Understanding The Mutual Fund Style Box

    Evaluate your investments with this simple tool.
  2. ETFs & Mutual Funds

    Which Mutual Fund Style Index Is For You?

    The Russell Investments and MSCI Barra style classification systems can help you pick the right mutual fund - if you know how they work.
  3. Managing Wealth

    Is Your Investing Style Hot, Or Not?

    Don't let your portfolio construction fall out of fashion.
  4. Trading

    Mutual Fund Style Drift Not Always A Bad Thing

    Style drift has a bad reputation, but it can be a sign that your fund is thriving.
  5. Managing Wealth

    Mutual Funds: Different Types Of Funds

    No matter what type of investor you are, there is bound to be a mutual fund that fits your style. According to the last count there are more than 10,000 mutual funds in North America! That means ...
  6. ETFs & Mutual Funds

    Build A Model Portfolio With Style Investing

    This sophisticated approach will add flair to your returns.
  7. Retirement

    Too Many Mutual Funds?

    Is there a magic number you should be aiming for? Find out here.
  8. ETFs & Mutual Funds

    Style Drift Can Hurt Mutual Fund Returns

    Small, gradual changes in a portfolio manager's stated strategies can be a big risk for investors.
  9. ETFs & Mutual Funds

    Digging Deeper Into Mutual Fund Names

    Go beyond the name and find out if that fund fits into your portfolio.
  10. ETFs & Mutual Funds

    Mutual Fund Ratings: Are They Deceiving?

    Rating systems are a helpful - but not perfect - tool to help you find a winning fund.
Trading Center