Page 359
Bond Style Box
|
Short-Term |
Intermediate-Term |
Long-Term |
| High-Quality |
1 |
2 |
3 |
| Medium-Quality |
4 |
5 |
6 |
| Low-Quality |
7 |
8 |
9 |
The cells pretty much define the same kind of risk/reward
relationship as the stock fund style box’s cells. So the bond fund in our
example is a high-risk (with high return potential) fund most likely
made up of long-term (10 or more years to maturity) junk bonds.
Again, remember that the style box is only a quick snapshot of a
fund’s current investment style. It is a very helpful tool to get an
immediate reading, but it is no substitute for a more in-depth study of
the fund’s characteristics, including the specific securities that make up
its portfolio.
Expenses
One of the biggest drawbacks of funds is their cost. You wouldn’t
think that an investment company would just create a fund and open it
up to investors out of the goodness of its heart. They are in it for the
money. The simple fact is that funds have their own costs to operate.
Someone has to pay the salaries of the fund manager, the analysts, the
advisers, marketing costs, and other administrative fees, and that …
|