The anatomy of our Fund Reports - Part 2
See how our Fund Reports can further support your investment decisions
This week we will take a closer look at some of the more detailed information available within the factsheet.
Analyst Reports/Qualitative ratings
The analyst’s report will give you the opinion on a fund from Morningstar’s team of experts, all of whom have dedicated sector coverage and are specialists in their fields.
The report will highlight the analyst’s view on the fund’s strengths and weaknesses and its potential role in your portfolio.
Introduced in February 2009, the Qualitative rating is a five-point scale to give a sense of how good, bad or indifferent a fund is. The process of arriving at this rating considers a number of areas.
Morningstar analysts look at the parent company in detail and consider amongst other things:
- How they reward their staff
- How well they communicate with investors in their funds
- How their charges compare with those of similar funds
- Their marketing strategy (do they launch trendy funds to gather assets?)
- Whether they restrict the amount of money allowed into a fund to make it easier to manage.
- Its success or failure over time
- Its strengths and weaknesses
- The risk controls surrounding it
- The manager
- Whether there is a deputy
- The analyst team (if there is one),
- The interaction with colleagues and sharing of ideas
All of this analysis is brought together in the opinion text to give you an overview of a fund and to explain why it has been awarded the rating that it carries.
Risk and Return
This tab provides a detailed look at the fund’s historic performance, factoring in the risk an investor was exposed to over certain time periods.
Accompanying this are some more specialist quantitative measures used to examine the fund’s performance.
Remember, as always, that with all of these measures how a fund has behaved in the past is no guarantee of how it will perform in the future.
On this page you can see:
- Morningstar Rating (3, 5 and 10 years) – based on long-term return vs. risk
- Volatility measurements – 3-year:
- Modern Portfolio Theory statistics (MPT):
This section gives a more detailed drill-down into the securities held by the fund, as seen in the portfolio profile on the overview page. You will again be able to see the investment style details represented in the Morningstar Style Box (Equity or Bond), alongside a breakdown of the market capitalisation of the fund holdings where relevant.
Alongside this you are presented with further details on the fund holdings, showing the following:
- Valuation and Growth Ratios and how these compare to the average holdings of funds in the same Morningstar category
- Asset allocations – showing how much of the fund’s holdings are composed of the following types of securities:
- stocks
- bonds
- property
- cash
- other holdings
- long and short positions
