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

Mutual Fund Style Box

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

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

    A method for calculating the value of an asset using the last ...
  2. Bear Fund

    A mutual fund designed to provide higher returns when the market ...
  3. Ulcer Index - UI

    An indicator developed by Peter G. Martin and Byron B. McCann ...
  4. Investment Company Act Of 1940

    Created in 1940 through an act of Congress, this piece of legislation ...
  5. Product Portfolio

    Investopedia explains: A Product Portfolio is the collection ...
  6. Sharpe Ratio

    A ratio developed by Nobel laureate William F. Sharpe to measure ...
  1. What are the risks involved in keeping my money in a money market account?

    Setting aside funds in a money market account can be a safe investment strategy, but investors should be aware of the risks ...
  2. How much of my total assets should I be keeping in my money market account?

    Investing a portion of total assets in a cash position such as a money market account provides investors access to funds ...
  3. Does it make sense for me to have a money market account if I don't want to buy any ...

    Saving funds within a money market account or mutual fund does not have to be limited to those wanting to buy or sell securities ...
  4. Why would you keep funds in a money market account and not a savings account?

    Read about the differences between money market accounts and savings accounts, and see why a depositor would elect a money ...

You May Also Like

Related Tutorials
  1. Mutual Funds & ETFs

    Top ETFs And What They Track: A Tutorial

  2. Retirement

    Analyzing The Best Retirement Plans And Investment Options

  3. Mutual Funds & ETFs

    Complete Guide To Investment Companies, Funds And REITs

  4. Mutual Funds & ETFs

    Fund Transactional Activity

  5. Mutual Funds & ETFs

    Hedge Funds Tutorial

Trading Center