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Returns-based analysis would analyze the returns of the fund itself, and by comparing them to US equity indices, may determine that the fund is heavily exposed to the large-growth space. Holdings-based analysis would examine the fund's stated holdings, and provide the names and percentages of the stocks in question.
The Morningstar Style Box is a grid of nine squares used to identify the investment style of stocks and mutual funds. Developed by Don Phillips and John Rekenthaler of Morningstar, Inc., [1] the Style Box was launched in 1992. [2] The vertical axis of the Style Box represents an investment's size category: small, mid and large. [3]
In 2015, Fama and French extended the model, adding a further two factors — profitability and investment. Defined analogously to the HML factor, the profitability factor (RMW) is the difference between the returns of firms with robust (high) and weak (low) operating profitability; and the investment factor (CMA) is the difference between the returns of firms that invest conservatively and ...
Morningstar is known for its analysis of long-only mutual funds, but the Brinson-Fachler analysis is also applicable to hedge ranking funds. [ 10 ] The Brinson model performance attribution can be described as "arithmetic attribution" in the sense that it describes the difference between the portfolio return and the benchmark return.
A mutual fund is a type of pooled investment fund in which many people own shares. Mutual funds invest in many different companies, and some even invest in the entire stock market.
One key result of the above analysis is the two mutual fund theorem. [12] [13] This theorem states that any portfolio on the efficient frontier can be generated by holding a combination of any two given portfolios on the frontier; the latter two given portfolios are the "mutual funds" in the theorem's name. So in the absence of a risk-free ...
Growth stocks: A growth stock is one that is expected to increase in value and beat the market, delivering higher-than-average returns over the long term. Growth stocks are typically from ...
When the dividend payout ratio is the same, the dividend growth rate is equal to the earnings growth rate. Earnings growth rate is a key value that is needed when the Discounted cash flow model, or the Gordon's model is used for stock valuation. The present value is given by: