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. Investing

    Understanding The Mutual Fund Style Box

    Evaluate your investments with this simple tool.
  2. Investing

    A Fund's Investment Objective

    Learn to evaluate a fund's investment objective, or "style".
  3. Financial Advisor

    How To Pick Your Investment Style

    Find out what an investing style is and how to figure out which one suits you.
  4. Investing

    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. Investing

    Build A Model Portfolio With Style Investing

    This sophisticated approach will add flair to your returns.
  6. Taxes

    Tax Forms Every Investor Must Understand

    Recent legislation has added a few new items to the list of tax forms that taxpayers must use to report their investment income. Know which forms you will need to file your taxes this year.
  7. Investing

    Too Many Mutual Funds?

    Is there a magic number you should be aiming for? Find out here.
  8. Investing

    Mutual Fund Ratings: Crucial or Insignificant?

    Mutual fund ratings can help investors, but they have their drawbacks as well.
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center