Morningstar Advisor - Winter 2008 - (Page 10) On Topic How do you use the Morningstar Style Box? Let us know at magazine_editor@morningstar.com I need both “go-anywhere” funds, which I place outside my asset allocations, and strict style funds, which I use within my asset allocations. I can tolerate some looseness in how well the funds fit the style boxes, but style drift and mergers into dissimilar funds are a real bane: Drifted funds have to be sold, new funds have to be identified, analyzed, and purchased, and capital gains must be incurred. The Ownership Zone, style breakdowns, and Current Investment Style all help me fine tune for any looseness. Dan Cullen American Renaissance Ventures, Princeton, NJ Morningstar Ownership Zone Large Med Small Value Blend Growth Shaded area shows style range of fund’s holdings. Current Investment Style Large Med Small Value Blend Growth I have to admit that years ago, when the style box was a relatively new concept, I used it as a format to be filled in with style-efficient funds. Now I use it to help me understand the exposure that my clients’ portfolios have, often through the use of the Portfolio X-Ray. I tend to set up core funds that will be defensive in nature, often dividendoriented that are very consistent over time. I then fill in with multicap, multistyle, and other sorts of “non-style-box” funds where I am putting my faith in the skills of a manager rather than any prospectus-driven strategy. Kenneth M. Ribyat Smith Barney, Alexandria, VA A snapshot of the fund’s current portfolio. Might differ from a fund’s category, which is based on an average of three and five years of portfolio data. Portfolio X-Ray Morningstar’s signature account analysis tool that breaks down a portfolio’s holdings across the style box. 10 Morningstar Advisor Winter 2008
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