Morningstar Advisor - Fall 2007 - 29
Markets tend to act more like each other in times of stress and excess— precisely when investors most need diversification. many foreign firms earn a big share of their profits from outside their home market. Companies in global industries such as oil, health care, and consumer staples get an especially big portion of their revenues from foreign sources, no matter where they’re headquartered. The largest holding in the S&P 500 is ExxonMobil XOM, while British Petroleum BP grabs the same position in EAFE. Both oil companies generate about 30% of their revenue in the United States and the remainder around the globe. Nearly all major oil firms have similarly global profiles—regardless of domicile or which index they call home. The story is the same with big drug makers. GlaxoSmithKline GSK, Roche RHHBY, and Novartis NVS are foreign-domiciled members of EAFE. Johnson & Johnson JNJ, Pfizer PFE, and Abbott Labs ABT are U.S.-based constituents of the S&P 500. All six firms generate close to half their revenues in the United States and the remainder around the globe. Is it accurate to classify any of these companies as foreign or domestic based on their home country? Similar trends are apparent even among emerging-markets and smaller-cap stocks. Petrobras of Brazil PBR, for example, is certainly a global oil firm. Russian oil firm Lukoil LUKOY even advertised its name during the baseball playoffs at the Philadelphia Phillies’ Citizen Bank Park. Several small industrial European firms—such as Vossloh, a maker of rail-track fasteners and other rail components—benefit from China’s infrastructure spending. This corporate globalization makes diversification difficult. It’s hard to figure out just how much foreign exposure an investor’s portfolio has, even when it’s composed primarily of funds classified as “domestic” or “U.S.-focused.” On the other side, some Correlation When You Least Need It: Correlations between the S&P 500 and the MSCI EAFE spiked during the 1987 crash and the tech bubble and burst of the late 1990s, early 2000s. $1K .75 .50 .25 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Rolling 60-Month Correlation Ending MorningstarAdvisor.com 29
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Morningstar Advisor - Fall 2007
Table of Contents for the Digital Edition of Morningstar Advisor - Fall 2007
Morningstar Advisor Fall 2007
Features
Departments
Letter from the Editor
Inbox
10 Years After: Developing Markets Make Progress
Research Briefs
Investors Should Adjust Their Home Bias
Few Mutual Funds Exhibit Serial Correlation
Valuating ETFs, the Equity Analyst's Way
It’s All About Location
See the World (Differently)
The Return of the Global Flexible Investor
Map of International Value
Sound as a Loonie?
Fair Exchange
In Their Own Worlds
A Good Read
Putting Their Heads Together
Buying Protection
Scoping Out Easy-to-Use Funds
Finding Good Stewards
Consumer Firms Go Global
Mutual Fund Analyst Picks
Undervalued Stocks
Most Popular Variable Annuities
New at Morningstar
The Whole Wide World
Morningstar Advisor - Fall 2007 - Morningstar Advisor Fall 2007
Morningstar Advisor - Fall 2007 - Cover2
Morningstar Advisor - Fall 2007 - 1
Morningstar Advisor - Fall 2007 - 2
Morningstar Advisor - Fall 2007 - Features
Morningstar Advisor - Fall 2007 - Departments
Morningstar Advisor - Fall 2007 - 5
Morningstar Advisor - Fall 2007 - 6
Morningstar Advisor - Fall 2007 - Letter from the Editor
Morningstar Advisor - Fall 2007 - 8
Morningstar Advisor - Fall 2007 - Inbox
Morningstar Advisor - Fall 2007 - 10 Years After: Developing Markets Make Progress
Morningstar Advisor - Fall 2007 - 11
Morningstar Advisor - Fall 2007 - 12
Morningstar Advisor - Fall 2007 - Research Briefs
Morningstar Advisor - Fall 2007 - 14
Morningstar Advisor - Fall 2007 - Investors Should Adjust Their Home Bias
Morningstar Advisor - Fall 2007 - 16
Morningstar Advisor - Fall 2007 - Few Mutual Funds Exhibit Serial Correlation
Morningstar Advisor - Fall 2007 - 18
Morningstar Advisor - Fall 2007 - 19
Morningstar Advisor - Fall 2007 - Valuating ETFs, the Equity Analyst's Way
Morningstar Advisor - Fall 2007 - 21
Morningstar Advisor - Fall 2007 - 22
Morningstar Advisor - Fall 2007 - 23
Morningstar Advisor - Fall 2007 - It’s All About Location
Morningstar Advisor - Fall 2007 - 25
Morningstar Advisor - Fall 2007 - 26
Morningstar Advisor - Fall 2007 - 27
Morningstar Advisor - Fall 2007 - See the World (Differently)
Morningstar Advisor - Fall 2007 - 29
Morningstar Advisor - Fall 2007 - 30
Morningstar Advisor - Fall 2007 - 31
Morningstar Advisor - Fall 2007 - 32
Morningstar Advisor - Fall 2007 - The Return of the Global Flexible Investor
Morningstar Advisor - Fall 2007 - 34
Morningstar Advisor - Fall 2007 - 35
Morningstar Advisor - Fall 2007 - 36
Morningstar Advisor - Fall 2007 - 37
Morningstar Advisor - Fall 2007 - 38
Morningstar Advisor - Fall 2007 - 39
Morningstar Advisor - Fall 2007 - Map of International Value
Morningstar Advisor - Fall 2007 - 41
Morningstar Advisor - Fall 2007 - Sound as a Loonie?
Morningstar Advisor - Fall 2007 - 43
Morningstar Advisor - Fall 2007 - 44
Morningstar Advisor - Fall 2007 - 45
Morningstar Advisor - Fall 2007 - Fair Exchange
Morningstar Advisor - Fall 2007 - 47
Morningstar Advisor - Fall 2007 - 48
Morningstar Advisor - Fall 2007 - In Their Own Worlds
Morningstar Advisor - Fall 2007 - 50
Morningstar Advisor - Fall 2007 - 51
Morningstar Advisor - Fall 2007 - 52
Morningstar Advisor - Fall 2007 - 53
Morningstar Advisor - Fall 2007 - 54
Morningstar Advisor - Fall 2007 - 55
Morningstar Advisor - Fall 2007 - A Good Read
Morningstar Advisor - Fall 2007 - 57
Morningstar Advisor - Fall 2007 - 58
Morningstar Advisor - Fall 2007 - 59
Morningstar Advisor - Fall 2007 - Putting Their Heads Together
Morningstar Advisor - Fall 2007 - 61
Morningstar Advisor - Fall 2007 - 62
Morningstar Advisor - Fall 2007 - 63
Morningstar Advisor - Fall 2007 - Buying Protection
Morningstar Advisor - Fall 2007 - 65
Morningstar Advisor - Fall 2007 - 66
Morningstar Advisor - Fall 2007 - 67
Morningstar Advisor - Fall 2007 - 68
Morningstar Advisor - Fall 2007 - 69
Morningstar Advisor - Fall 2007 - 70
Morningstar Advisor - Fall 2007 - 71
Morningstar Advisor - Fall 2007 - Scoping Out Easy-to-Use Funds
Morningstar Advisor - Fall 2007 - 73
Morningstar Advisor - Fall 2007 - 74
Morningstar Advisor - Fall 2007 - 75
Morningstar Advisor - Fall 2007 - Finding Good Stewards
Morningstar Advisor - Fall 2007 - 77
Morningstar Advisor - Fall 2007 - Consumer Firms Go Global
Morningstar Advisor - Fall 2007 - 79
Morningstar Advisor - Fall 2007 - 80
Morningstar Advisor - Fall 2007 - 81
Morningstar Advisor - Fall 2007 - Mutual Fund Analyst Picks
Morningstar Advisor - Fall 2007 - 83
Morningstar Advisor - Fall 2007 - 84
Morningstar Advisor - Fall 2007 - 85
Morningstar Advisor - Fall 2007 - Undervalued Stocks
Morningstar Advisor - Fall 2007 - 87
Morningstar Advisor - Fall 2007 - Most Popular Variable Annuities
Morningstar Advisor - Fall 2007 - 89
Morningstar Advisor - Fall 2007 - 90
Morningstar Advisor - Fall 2007 - 91
Morningstar Advisor - Fall 2007 - 92
Morningstar Advisor - Fall 2007 - New at Morningstar
Morningstar Advisor - Fall 2007 - 94
Morningstar Advisor - Fall 2007 - 95
Morningstar Advisor - Fall 2007 - The Whole Wide World
Morningstar Advisor - Fall 2007 - Cover3
Morningstar Advisor - Fall 2007 - Cover4
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