In an effort to distinguish funds by what
they own, as well as by their prospectus objectives and styles,
Morningstar developed the Morningstar Categories. While the prospectus
objective identifies a fund's investment goals based on the wording in the
fund prospectus, the Morningstar Category identifies funds based on their
actual investment styles as measured by their underlying portfolio
holdings (portfolio statistics and compositions over the past three
years). If the fund is new and has no portfolio, we estimate where it will
fall before assigning a more permanent category. When necessary, we may
change a category assignment based on current information. Here's a list
of the categories:
Domestic Equity Funds
Domestic equity funds are placed in a category based on the style and size of the stocks they typically own. The style and size parameters are based on the divisions used in the investment style box: Value, Blend, or Growth style and Small, Medium, or Large median market. By reviewing their investment style over the past three years, we place domestic equity funds in one of the following nine categories: Large Growth, Large Blend, Large Value, Medium Growth, Medium Blend, Medium Value, Small Growth, Small Blend, and Small Value. Morningstar also includes several other domestic equity categories, including: Specialty Heath Care, Specialty Technology, Specialty Utilities, Specialty Communications, Specialty Financials, Specialty Real Estate, Specialty Natural Resources, Specialty Unaligned, Convertible Bond, and Domestic Hybrid.
International Equity Funds
Equity funds with 40% or more of their equity holdings in foreign stocks (on average over three years) are placed in the international equity class. These categories include Europe, Japan, International Hybrid, Latin America, Diversified Pacific, Pacific ex. Japan, Specialty Precious Metals, Diversified Emerging Markets, World Stock, and Foreign Stock.
Funds with 70% or more of their assets invested in bonds are classified as Bond Funds. Bond funds are divided into two main groups: Taxable Bond and Municipal Bond.
Taxable Bond Fund categories include the following: Long-Term Government, Intermediate-Term Government, Short-Term Government, Long-Term Bond, Intermediate-Term Bond, Short-Term Bond, Ultrashort-Bond, International-Bond, High-Yield Bond, Emerging-Markets Bond and Multisector Bond.
Municipal-Bond categories include the following: Municipal Bond-Short-Term (national and single-state), Municipal Bond National-Long-Term, Municipal Bond Single-State-Long-Term, Municipal Bond National-Intermediate-Term, Municipal Bond Single-State-Intermediate-Term, Muni New York Intermediate Term, Muni New York Long-Term, Muni California Intermediate Term, Muni California Long-Term.
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