The Power of Morningstar Style Box in Mutual Fund Investment

Is it true that if Jay owns a mutual fund holding 95% of large cap growth stocks, then her fund will occupy the top left corner of Morningstar style box?

True or False?

Answer:

False

The Morningstar style box is a graphical representation that categorizes mutual funds based on their investment style and market capitalization. It consists of nine squares divided into three columns and three rows.

The rows represent investment style, with value stocks in the top row, blend stocks in the middle row, and growth stocks in the bottom row. Since Jay's mutual fund holds 95% of large cap growth stocks, it would fall into the large cap growth category, which is located in the bottom left corner of the Morningstar style box. Therefore, her fund would occupy the bottom left corner, not the top left corner as stated in the question.

The Morningstar style box is a popular tool used by investors to analyze and compare mutual funds. It provides a visual representation of a fund's investment style and market capitalization. By understanding where a fund falls within the style box, investors can get a better idea of its risk and return characteristics. In this case, since Jay's fund predominantly holds large cap growth stocks, it would be categorized in the large cap growth square of the style box, which is located in the bottom left corner.