Mutual Fund Categorization
Mutual Fund Bullet Tour Page 10The classification criteria are used to categorize mutual funds. However, due to the vast number of possible combinations that are possible with the set of classification criteria, some decisions must be made up front to limit the number of categories.The use of style boxes is a convenient means of accomplishing this, although they're not a perfect solution. The style boxes use three primary criteria to categorize mutual funds.
The style boxes must be used with the following in mind: - Most mutual funds do not fit neatly into one cell of a style box.
- Average or median market cap do not provide any indication of the breadth of the the range of market caps of the companies owned by a fund.
- Many funds labeled domestic have substantial foreign holdings.
- Average duration or maturity gives no clue as to the range of durations.
- Bond funds tend to invest across two or more levels of quality.
The style box is a good place to start, but additional investigation is required to determine the true nature of a mutual fund. The additional information can be found in a fund's prospectus, on a fund family's web site and at various online resources, such as Yahoo! Finance.See the list of the various types of mutual funds for a comprehensive listing with links to descriptions of each type. Relevant Content:
|
