Mutual Fund Style Box
  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


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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. Style Box

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

    A visual representation of the principle investment characteristics ...
  3. Fixed-Income Style Box

    Created by Morningstar, a fixed-income style box is designed ...
  4. Style Drift

    The divergence of a mutual fund from its stated investment style ...
  5. International Equity Style Box

    A visual representation of the principal investment characteristics ...
  6. Style

    The investment approach or objective that a fund manager uses ...
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