The Style Box: Description, Not Prescription
Facts and myths about the ubiquitous nine-box grid.
The goal of the Morningstar Style Box, which we rolled out in 1992, was to create an easy-to-use system for classifying funds based on what securities a fund actually owns. We map stock funds into one of nine boxes based on the size of the companies in which they invest and their holdings' aggregate style characteristics (value, core, and growth), and we determine bond funds' style-box positioning by looking at their overall credit-quality and interest-rate positioning.
Over the past 15 years, the nine-square style box has gained a lot of traction among institutions, advisors, and individual investors, and it has become the industry standard for classifying and categorizing funds.
At the same time, however, the style box has also come under fire. Critics have asserted that Morningstar believes style-pure funds are better than freer-ranging offerings, for example. They've also argued that Morningstar polices funds based on their style-box placement and will blow the whistle when a fund veers too far from where it has landed in the past. Neither assertion is true.
Christine Benz does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.