Morningstar Magazine - August/September 2018 - 19
Dispatches
Global Briefs
TRENDS
The Foreign Side of the S&P 500
With many businesses' operations now spanning the globe, a company's revenue sources don't necessarily have geographic
ties to its domicile. Indeed, while the S&P 500 is a popular bellwether for large-cap U.S. stocks, companies within that
benchmark receive about 38% of their revenue from outside the United States. That includes 14% from Europe and roughly 8%
from China alone. Morningstar has undertaken a project that will allow analysis of funds by geographic revenue source;
this capability will become available later in 2018.
Revenue Exposure of the S&P 500 (%)
Russia 1.0
U.K. 2.8
Canada 1.7
Germany 2.9
France 1.9
China 7.5
South Korea 1.0
United States 62.3
Italy 1.4
Brazil 1.4
Mexico 1.0
Japan 3.6
India 1.6
Source: Morningstar; annual filings of S&P 500 companies. Data as of 01/31/2018. Countries accounting for less than 1% of total revenue exposure are excluded.
Source: Morningstar. Data as of 11/30/2017
How Exposed Is Your
Domestic
Portfolio
Revenue
Exposure of the
S&P 500 (%)
United States
62.3
to
Overseas
Revenue?
7.5
China
Japan
AMERICAS
3.6
Germany
United States
United Kingdom
2.9
2.8
1.9 are inevitably
France
Diversified portfolios in today's world
global. At the end of 2017, for example,
1.7 the
Canada
median
exposure
to
companies
domiciled
outside
1.6
India
Brazil
1.4
Italy
1.4
Mexico
1.0
the United States was 4.6% for actively managed
funds in the large-growth Morningstar
Category. Nearly 70 funds out of 350-plus had at
least 10% of their assets in non-U.S. stocks.
But domicile does not tell the whole story:
Many U.S.-based businesses receive revenue
from overseas.
To help investors understand the extent to which
a domestic fund they own provides exposure
to overseas revenue sources, Morningstar
is undertaking a geosegmenting project that will
allow analysis of funds from the standpoint
of revenue sources. This capability will appear in
products later in 2018.
Here's an example of what this analysis can reveal:
Harbor Capital Appreciation HACAX, which
receives a Morningstar Analyst Rating of Gold, has
a more global look when revenue sources are
considered. Measured simply by domicile, the fund
invests about 88% of its assets at home and
11% abroad. However, more than half its revenue
sources come from outside the United States,
including 18% from Europe and 17% from China.
global.morningstar.com/Morningstarmagazine
19
http://global.morningstar.com/Morningstarmagazine
Table of Contents for the Digital Edition of Morningstar Magazine - August/September 2018
Contents
Morningstar Magazine - August/September 2018 - Cover1
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Morningstar Magazine - August/September 2018 - 1
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Morningstar Magazine - August/September 2018 - Contents
Morningstar Magazine - August/September 2018 - 4
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