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Morningstar Introduces Model Fund Portfolios to Help Investors Learn How to Combine Great Funds

CHICAGO, Oct 11, 2001 – Morningstar, Inc., a leading investment information firm, is introducing two tax-sheltered 'model' portfolios to help investors better understand how mutual funds work together to create a diversified, complementary mix of investments. Morningstar will introduce the Great Managers portfolio and the Index-Anchored portfolio in the October 2001 issue of Morningstar® FundInvestorTM, a monthly newsletter for individual investors. It will also invest $100,000 in each portfolio. Next year, the company will introduce model portfolios for taxable accounts. 

"Putting great funds together into a cohesive portfolio is a critical--and under-recognized--part of the investment process," said Christine Benz, editor of Morningstar FundInvestor. "While we're hesitant to make one-size-fits-all recommendations, these portfolios combine our analysts' favorite funds and illustrate our thought process for choosing great funds while minimizing risk."

Morningstar's model portfolios will be assembled based on factors such as strong past performance, moderate costs, manageable assets and solid management. The tax-sheltered Great Managers Portfolio includes funds with distinct and difficult-to-replicate investment styles. 

The tax-sheltered Index-Anchored Portfolio will prove that index and actively managed funds can coexist peacefully. More risk-averse and cost-conscious than the Great Managers Portfolio, this portfolio includes an S&P 500 index fund, complemented with actively managed funds.

The portfolio committee, led by Russ Kinnel, director of fund analysis, Benz, and senior analysts Scott Cooley, Chris Traulsen, Peter Di Teresa, and William Harding, will analyze performance each month in Morningstar FundInvestor and rebalance the portfolios each December. The committee also will monitor each fund relative to its category peers and will consider selling funds because of management or organizational changes, a strategy alteration, rising expenses, or huge inflows that could affect the fund's investment style.

"One of the goals in assembling these portfolios is to introduce our readers to terrific managers who aren't yet household names," Kinnel said. "We look forward to blending the hidden gems with the better-known managers to create bold, top-performing portfolios."

Morningstar FundInvestor
The monthly newsletter includes full-page fund profiles, portfolio critiques and makeovers, and in-depth coverage of the mutual-fund industry with interviews of top money managers. Morningstar FundInvestor also includes unbiased, up-to-date information on 500 funds handpicked by the editorial staff. A yearly subscription of 12 issues is available for $89.

About Morningstar, Inc.
Chicago-based Morningstar, Inc. is a leading provider of independent investment information. Morningstar offers an extensive line of print, software, and Internet-based products and services for individuals, financial advisors, institutions, and the media. The company is the trusted source for investment information, data, and analysis of stocks, mutual funds, exchange-traded funds, closed-end funds, and variable annuity/life subaccounts.

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