Investment Finder Market Data

As you're searching for new investments to fill out your target model and/or diversify within each market segment, Morningstar's Investment Finder offers a variety of criteria you can use to narrow your search results based on your investment preferences. The Investment Finder also displays corresponding real-time market data for each of your search results.

Snapshot

Under the Snapshot drop-down, you can choose to search within specific fund families, for securities with a specific Morningstar STAR rating or above, or for investments within a given category. Let's start at the top of this section and work our way down.

Selecting a fund family can potentially have a strong impact on your portfolio. Fund families are managed differently and you may like the management style of one more than another. When that's the case, putting more money into a fund family that you like over time can result in a discount on the fund's expense or management fees.

Next, you can search for investments according to their STAR Rating. Morningstar rates stocks and funds on a one-to-five STAR scale. For stocks, the star value is used to identify stocks trading at a premium or discount to their fair value estimate (as estimated by Morningstar analysts). Stocks with a higher star rating (4 or 5) are considered to be trading at a large discount. Stocks with a lower star rating (1 or 2) are considered to be trading at a large premium.

For funds, the star system is used to measure a fund's past performance based on both risk and return. The rating system is designed to allow you to analyze funds that use similar investment strategies and determine distinguishing performance factors that may impact your research process. A five-star rating indicates that the fund is in the top 10 percent of its Morningstar Category. Four stars are given to the next 22.5 percent, three to the middle 35 percent, two to the next 22.5 percent, and one star is assigned to funds in the bottom 10 percent of their Morningstar Category.

You can also search for investments according to Morningstar's categories system. Filtering for funds by category allows you to see investments in categories that match your diversification objectives and performance goals.

Go back to instructions for using Morningstar's Investment Finder.

Performance & Price

To continue searching based on your performance goals, the Performance & Price drop-down allows you to filter for investments that match your return objectives. You can search by year-to-date returns, or returns over a one-, three-, five- or ten-year period. To control the cost of reallocating your portfolio, you can search for investments within a specific price range. Here, you also have the ability to search by net asset value, which is the price per share for mutual funds or the per-share value for an exchange-traded fund. You can search by market capitalization, which measures the current value of a company, or by the 52-week high or low of the company's share price.

Your choices in this section can help you while you attempt to include investments with the right value and performance criteria for your investment strategy in your portfolio.

Go back to instructions for using Morningstar's Investment Finder.

Fundamentals & Risk

With the Fundamentals & Risk drop-down, you can customize your search based on the one-year beta of investments, price-to-earnings or P/E ratio, price-to-book or P/B ratio, one-year alpha, the three-year standard deviation, net expense ratio, and the dividend yield TTM. Let's quickly talk about each of these categories a little bit more.

  • One-year beta is a volatility measurement of a stock or fund as compared to the Standard & Poor's 500 Stock Index. The market value of investments with a higher beta tends to rise or fall with greater frequency than investments with low beta scores.
  • An investment's price-to-earnings ratio is the relationship between a company's earnings and its share price. A low P/E ratio can be the sign of an undervalued company whose price hasn't caught up with its earnings potential. Conversely, low P/E ratios can be a clue that the market considers the company a poor investment risk. Higher P/E ratios are typically companies that are expected to grow rapidly in value and are often more volatile that stocks with lower P/Es.
  • The price-to-book ratio compares the market value of an investment to its book value. In this case, a lower ratio may mean that the investment is undervalued or that there are problems with the company. Knowing the P/B ratio of an investment allows you to make decisions about whether or not you're paying fair price for a position.
  • The one-year alpha is a mathematical measurement of the expected amount of return from an investment over a year's time.
  • Three-year standard deviation offers a statistical measurement of how far the price of an investment moves above or below its average value. The wider the range, or the greater the standard deviation, the riskier an investment is considered to be.
  • A fund's net expense ratio is the percentage of the fund's assets used to pay for operating expenses and management fees.
  • The dividend yield TTM, or the trailing 12-month dividend yield, is the distribution rate of a fund calculated by dividing the amount of the dividends per share by the per share market price of a fund.

You can use these criteria fields to help you search for investments that offer the amount of risk and stability that's comfortable for you.

Go back to instructions for using Morningstar's Investment Finder.

Portfolio

Finally, the Portfolio drop-down let's you select the equity or fixed-income styles that best fit your portfolio, number of holdings, sector exposure, regional exposure and whether or not a fund is leveraged.

The Morningstar Style Boxes displayed for equities and fixed income products is a Morningstar data point that provides a visual representation of an asset's investment style. Knowing the style of an asset can help you make informed comparisons of one asset to another and build a diversified portfolio that includes a wide variety of investment types.

When referring to equities, the vertical access you see here classifies securities into small-, mid- and large-size market capitalizations. A style of value, core or growth is assigned to along the horizontal axis. When referring to fixed income products, the vertical axis classifies credit quality of bonds owned and the horizontal axis depicts interest rate sensitivity as measured by a bond's effective duration. This can help you determine the reliability and volatility associated with a fixed income investment.

Next, you can choose the number of holdings you want to see in a fund and a fund's exposure to different sectors and regions. Depending on your strategy, the amount of diversification you choose here will vary. If you're looking for highly diversified investments, you may search for funds with a large number of underlying holdings spread across a variety of sectors and regions. If you're willing to take on a little more risk in exchange for higher reward potentials, you may choose to look for funds that are heavily weighted in a particular area of the market.

Finally, you can indicate whether you're searching for a leveraged fund in this section. Leveraged funds attempt to magnify exposure to an index. While a regular fund attempts to match the benchmark index's performance, a leveraged fund will usually try to outperform the index 2:1 or 3:1. This means that for each dollar you have invested, you have $2 or $3 exposure to the index, magnifying your potential risk and volatility by 200% or 300%.

Go back to instructions for using Morningstar's Investment Finder.

Keep in mind that while diversification may help spread risk it does not assure a profit, or protect against loss, in a down market.

Investors should consider the investment objectives, charges, expense, and unique risk profile of an Exchange Traded Fund (ETF) or mutual fund carefully before investing. A prospectus contains this and other information and should be read carefully before investing. A mutual fund prospectus may be ordered through www.scottrade.com or through a Scottrade branch office. An ETF prospectus must be obtained from the issuer.

The information provided should not be construed as a recommendation or investment advice.