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Fixed Income

Bond quality: Bond funds are assigned a style box placement of “low”, “medium”, or “high” based on their average credit quality. Funds with a low credit quality are those whose weighted-average credit quality is determined to be less than “BBB-”, medium are those less than “AA-“, but greater or equal to “BBB-“, and high are those with a weighted –average credit quality of “AA-“ or higher.

Bond Interest rate sensitivity: For interest-rate sensitivity, Morningstar obtains from fund companies the average effective duration. Generally, Morningstar classifies a fixed-income fund’s interest-rate sensitivity based on the effective duration of the Morningstar Core Bond Index (MCBI), which is currently three years. The classification of Limited will be assigned to those funds whose average effective duration is between 25% to 75% of MCBI’s average effective duration: funds whose average effective duration is between 75% to 125% of the MCBI will be classified as Moderate and those that are at 125% or greater of the average effective duration of the MCBI will be classified as Extensive.

Style Boxes Disclosure