A Closer Look at Morningstar's Four Stock Portfolios
Their philosophy, portfolio strategy, and portfolio composition.
Nothing focuses the mind like the prospect of being hanged in a fortnight, and nothing focuses the investment mind like the prospect of allocating capital between two or more investments. That's one reason we now have four stock portfolios--the Tortoise and Hare portfolios, the Growth Portfolio, and the Dividend Portfolio--based on the research produced by Morningstar's team of equity analysts.
In these portfolios, we sift through our high-rated stocks and make decisions about which ideas are most compelling, and how much of a portfolio's capital to allocate to each holding. Now, there's nothing wrong with simply picking stocks from our 5-star list. The issue is that we currently have 79 5-star stocks--a lot to choose from, and certainly more stocks than most investors want to own or monitor. Plus, stocks enter and leave our 5-star list every trading day. Finally, those 79 stocks represent only 5% of our coverage universe of almost 1,700 stocks; the market isn't particularly cheap these days. If the market slid, you could easily see hundreds of 5-star stocks, which would make building a portfolio out of the 5-star stocks an even tougher challenge.
Haywood Kelly, CFA has a position in the following securities mentioned above: KMX. Find out about Morningstar’s editorial policies.