Morningstar Advisor - Winter 2008 - (Page 76) Screens Breaking Style Conventions By Karen Dolan Use these screens to find funds that don’t fit neatly into a Morningstar category Morningstar’s category classifications might not always match your needs. Here are some ways to get around that issue with popular subcategories: go-anywhere portfolios, micro-cap funds, corporate-heavy intermediate-term bond funds, and ultrashort municipal bond funds. How to Find Funds that Break Boundaries SPQAX. The red centroid represents the fund’s weighted average of domestic stock holdings, and Val Bld Gro the blue zone represents 75% of fund’s domestic stock holdings. You can now use Advisor Workstation to search for funds that have more-free-wheeling portfolios. (This search functionality is not available in Principia.) Morningstar calculates dispersion to tell you how large or small the ownership zone is and consistency to indicate how much or how little a fund has tended to move around in the style box. To find go-anywhere, all-cap portfolios, we will focus in on funds with large Ownership Zones that haven’t tended to stay in one market-cap range. First, we want to isolate funds that have shown Sml Mid Lrg a high level of dispersion. Dispersion measures the variance among the holdings in the most recent portfolio for both size and style. Size Dispersion and Style Dispersion 5 5 High High If you’re looking for a fund that is willing to go anywhere in terms of size and style, look no further. The Morningstar Style Box has grown more dynamic over the years. While we still commonly show a black square filling in one of the nine sectors of the style box, we’ve enhanced it to show you the full Ownership Zone. Some funds’ holdings are concentrated in one sector (and thus have a smaller, more concentrated Ownership Zone), while others’ holdings are scattered all around. As an example, here’s the Ownership Zone for Jennsion Equity Income To find funds that haven’t stayed too committed to one market-cap range and are thus truly all-cap offerings, we used the size consistency measure. It gauges the extent of historical portfolio movements up and down the marketcap spectrum. and Size Consistency 5 Low Because we’re loosening the reins and looking for funds that exercise more freedom, we’ll 76 Morningstar Advisor Winter 2008
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