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. Dividend

    A distribution of a portion of a company's earnings, decided ...
  2. Sharpe Ratio

    A ratio developed by Nobel laureate William F. Sharpe to measure ...
  3. Historic Pricing

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

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

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

    Created in 1940 through an act of Congress, this piece of legislation ...
  1. What are the best mutual funds for investing in the electronics sector?

    Learn which mutual funds are popular among investors interested in the electronics industry and how these mutual funds add ...
  2. How do waivers, reimbursements and recoupments affect a fund's expense ratio?

    Understand what waiver, reimbursement and recoupment agreements in relation to a mutual fund mean for the management fees ...
  3. What are some popular mutual funds that give exposure to the drugs sector?

    Discover some of the most widely traded and top-rated mutual funds that investors can use to make profits from gains in the ...
  4. What can cause the rate of return to be negative?

    Learn how poor company or sector performance, economic turmoil and inflation can cause the rate of return on an investment ...

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