The Morningstar Style Box™ is a nine-square grid that provides a graphical representation of the investment style of stocks (Equity Style Box) and bonds (Fixed-Income Style Box).
What is the Morningstar Style Box™?
- The Morningstar Style Box is a nine-square grid that helps investors determine the investment style of individual securities or funds.
- There are two types of the Morningstar Style Box: the Equity Style Box and Fixed-Income Style Box.
The Equity Style Box categorizes stocks and stock funds. On the vertical axis, there are three categories that represent market capitalization: small, mid, and large caps. On the horizontal axis, there are value, blend, and growth categories. This three-by-three grid creates nine distinct categories that represent a stock’s or portfolio’s investment style.
The Fixed-Income Style Box also uses the same three-by-three structure as the Equity Style Box. Its vertical axis measures credit quality (low, medium, or high), and its horizontal axis measures interest-rate sensitivity (limited, moderate, or extensive). Fixed-income securities and fixed-income funds can be evaluated by this style box.
By providing an easy-to-understand visual representation of stock and bond characteristics, the Morningstar Style Box allows for informed comparisons and portfolio construction based on actual holdings as opposed to assumptions based on a fund's name or how it is marketed. The Morningstar Style Box also forms the basis for Morningstar's style-based fund categories and market indexes.