| | | | Stock Portfolios | | Morningstar Investment Services’ disciplined approach to investment management combines the science of portfolio construction with the art of active management. Simplifying the process of stock investing, Morningstar® Managed Portfolios Select Stock Baskets include a series of customizable portfolios developed using Morningstar, Inc.’s objective research and analysis. Ten distinct strategies help advisors meet specific investment preferences for their clients, while remaining sensitive to tax and risk objectives. | | |
| | | The Strategist Series includes three portfolios modeled after
the Tortoise, Hare, and Dividend portfolios from the popular Morningstar® StockInvestor™ and Morningstar® DividendInvestor™ newsletters. They provide a focused strategy centered around value, growth, or dividend investing that advisors can choose to achieve specific short- and long-term investment objectives.
The newest portfolio in the Strategist Series, the U.S. Wide Moat Focus, is designed to track the Morningstar® Wide Moat Focus™ Index. The portfolio invests equally in the 20 most undervalued “wide moat” stocks in the Morningstar, Inc. coverage universe. | | | | | | This series includes seven portfolios that provide broad market exposure based on style and market capitalization. These flexible strategies can be used to invest in specific market segments, as well as U.S. and international stocks. | | | | | Portfolio construction: Building a portfolio that revolves around the client | | |
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| | | Each Select Stock Baskets strategy can be tailored to suit a client’s investment preferences, such as excluding sectors, industries, or individual stocks, and incorporating existing holdings, bond mutual funds, and exchange-traded funds into the portfolio. After completing a questionnaire with the client, advisors will have a blueprint for risk, financial situation, and time horizon that can be used to determine the most suitable type of portfolio. Advisors can design a style-neutral portfolio, or build one with a tilt toward specific styles and sectors. | | | | | In-depth methodology: Morningstar® Equity Research | | |
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| | The Morningstar Investment Services team creates Select Stock Baskets portfolios using research produced by Morningstar, Inc.’s more than 100 equity analysts. Morningstar, Inc. provides equity research on more than 2,000 companies, making it one of the largest independent sources for stock analysis and data in the world.
Morningstar, Inc.’s stock research process begins with a thorough quantitative and qualitative analysis of competitive industry dynamics and ends with a complete set of projected financial statements and free cash flows. Analysts compare the resulting intrinsic value estimate to a stock’s current market price, in conjunction with the fundamentally based uncertainty rating, to produce the Morningstar Rating™ for stocks. This rating adapts quickly to market fluctuations, which helps identify both undervalued and overvalued opportunities. | | | | | Proactive management: Adjusting portfolios to account for change | | |
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| | In constructing each Select Stock Baskets account, Morningstar Investment Services searches Morningstar, Inc.’s coverage universe for the most highly rated stocks, paying due consideration to factors like risk, correlation to other securities, and client customization requests. Each account is then evaluated daily to ensure that the portfolio remains aligned with risk/return objectives. The process is also proactive in tax management and rebalancing to ensure that portfolios stay consistent with client expectations.
As an advisor, you can also actively monitor your clients’ portfolios. Through regular contact with the Morningstar Investment Services team, you can track portfolio progress to ensure continual suitability and consistency of the investments and review portfolio structures and positions. |
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| The Morningstar Investment Management division is a division of Morningstar and includes Morningstar Associates, Ibbotson Associates, and Morningstar Investment Services, all registered investment advisors and wholly owned subsidiaries of Morningstar, Inc. Morningstar Managed Portfolios are offered by Morningstar Investment Services, Inc. Portfolios offered by Morningstar Investment Services are intended for citizens or legal residents of the United States or its territories and can only be offered by a registered investment advisor or investment advisor representative.
The Select Stock Baskets portfolios invest in common stocks of U.S. companies, which are a type of equity security that represents an ownership interest in a corporation. Common stocks are subject to greater fluctuations in market value than other asset classes as a result of factors such as a company’s business performance, investor perceptions, stock market trends, and general economic conditions. During some periods, the securities of small- and mid-cap companies, as a class, have performed better than the securities of large companies, and in some periods they have performed worse. Stocks of small- and mid-cap companies tend to be more volatile and less liquid than stocks of large companies. Small- and mid-cap companies, as compared to larger companies, may have a shorter history of operations, may not have as great an ability to raise additional capital, may have a less diversified product line making them susceptible to market pressure, and may have a smaller public market for their shares.
For the small-cap sector, the portfolios may contain exchange-traded funds whose investment objective is to track indexes created and maintained by Morningstar Investment Services’ parent, Morningstar, Inc. In those cases, the sponsor of the exchange-traded funds (“ETF Sponsor”) enters into a licensing agreement with Morningstar, Inc. To mitigate any conflict of interests arising from Morningstar Investment Services’ usage of such exchange-traded funds, Morningstar, Inc.’s compensation from the ETF Sponsor will not be based on nor include assets that are a result of a Participating Client’s investment in those exchange-traded funds. In addition, Morningstar, Inc. does not/will not have any input into Morningstar Investment Services’ investment decisions, including what exchange-traded funds will be recommended for its portfolios. | |
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