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Broad diversification, distinctive, independent research and progressive risk management in five core model portfolios that span the risk spectrum.
Mutual FundPortfoliosAsset Allocation
Morningstar Investment Services
Inside Our Investment ProcessEach portfolio is created using a continual, five-step process.
3 Capital Markets Assumptions Ibbotson Associates’ respected asset class research forms the building blocks of our port- folios—starting with real-world data on how asset classes perform over time.
3 Strategic and Dynamic Asset Allocation
In this step, we use Ibbotson research to develop an efficient asset allocation mix designed to maximize return for a given level of risk.
3 Manager Selection Our investment professionals meet personally with managers and evaluate their investment styles using a five-pillar system to identify the most appropriate strategies to include in our portfolios.
3 Portfolio Construction Each potential holding undergoes careful scrutiny— including risk and expense reviews—to help deter- mine if it’s a good fit within a portfolio.
3 Ongoing Monitoring As markets change, so do our portfolios. Our investment team monitors them each day to stay well-positioned and risk-aware through the market’s ups and downs.
Ibbotson Asset AllocationIn investing, the essentials matter. That’s why we
start with research from our affiliate, Ibbotson
Associates—a leading authority on asset allocation—
to build our portfolios. Ibbotson Associates have
shown that the mix of assets in a portfolio can have
a greater impact on investment returns than
timing markets or picking stocks. Guided by this research,
we use Ibbotson’s risk and return forecasts to
develop a strategic asset allocation for our portfolios.
Morningstar DataWe think our independent approach sets us apart.
Once we’ve determined a portfolio’s asset allocation, we
sift through thousands of investments to identify
those which we think are worthwhile. Our research pro-
cess is backed by trusted data from our parent company,
Morningstar, Inc. From there, we evaluate each potential
holding using a proprietary methodology. Only those
with our highest conviction make it into your portfolio.
Active ManagementBecause markets are in constant motion, we don’t
take a ‘set it and forget it’ approach. We’re firm believ-
ers in active investing, and embrace an independent
approach by selecting flexible managers or lesser-known
boutique shops—seeking those with the potential
to deliver above-average risk-adjusted results over the
long term.
Face-to-Face ResearchBefore we invest in a fund, we want to understand
the people behind it. We meet one-on-one with
fund managers, asking detailed questions to uncover
how they make decisions. We look for those who
’eat their own cooking’ by investing their own personal
savings in the funds they oversee.
A range of core choices for every stage of your lifetime
Our investment team creates these diversified portfolios using a research-drivenprocess supported by independent fund analysis from Morningstar, Inc. and regular meetings with fund managers.
U.S. Stocks International Stocks Real Estate REITS Taxable Bonds Alternatives Short Term Reserves
Portfolios % Asset Allocation Goal
Aggressive Growth
Growth
Moderate Growth
Income & Growth
Conservative
Long-term capital appreciation. Designed to allow investors to participate fully in the growth the stock market can offer, the portfolio invests primarily in domestic and foreign equities.
Long-term capital appreciation. Allows investors to take advantage of the potential for stock market growth by investing primarily in domestic and foreign equities, while seeking to cushion equity market downturns with modest exposure to fixed-income securities.
Long-term growth with moderate volatility. Built with a focus on providing balanced and varied exposure by investing in both equity and fixed-income securities.
Moderate capital appreciation combined with current income. Combines the growth potential of equities with the balance that fixed-income securities can provide.
Protection from capital loss and a safeguard against inflation. Invested in fixed-income and equity securities, it’s best- suited for investors who value current income and stability over all else.
58 U.S. Stocks30 International Stocks5 Real Estate REITS0 Taxable Bonds5 Alternatives2 Short Term Reserves
48 U.S. Stocks23 International Stocks5 Real Estate REITS15 Taxable Bonds7 Alternatives2 Short Term Reserves
38 U.S. Stocks18 International Stocks4 Real Estate REITS30 Taxable Bonds8 Alternatives2 Short Term Reserves
30 U.S. Stocks10 International Stocks0 Real Estate REITS45 Taxable Bonds10 Alternatives5 Short Term Reserves
19 U.S. Stocks6 International Stocks0 Real Estate REITS55 Taxable Bonds13 Alternatives7 Short Term Reserves
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Momentum20/80
Momentum 40/60
Momentum60/40
Momentum 80/20
Momentum 95/5
Active/Passive20 / 80
Active/Passive40 / 60
Active/Passive60 / 40
Active/Passive80 / 20
Active/Passive95 / 5
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Ultra Short-Range Short-Range Mid-Range Long-Range
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Momentum20/80
Momentum 40/60
Momentum60/40
Momentum 80/20
Momentum 95/5
Active/Passive20 / 80
Active/Passive40 / 60
Active/Passive60 / 40
Active/Passive80 / 20
Active/Passive95 / 5
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Ultra Short-Range Short-Range Mid-Range Long-Range
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Momentum20/80
Momentum 40/60
Momentum60/40
Momentum 80/20
Momentum 95/5
Active/Passive20 / 80
Active/Passive40 / 60
Active/Passive60 / 40
Active/Passive80 / 20
Active/Passive95 / 5
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Ultra Short-Range Short-Range Mid-Range Long-Range
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Momentum20/80
Momentum 40/60
Momentum60/40
Momentum 80/20
Momentum 95/5
Active/Passive20 / 80
Active/Passive40 / 60
Active/Passive60 / 40
Active/Passive80 / 20
Active/Passive95 / 5
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Ultra Short-Range Short-Range Mid-Range Long-Range
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Momentum20/80
Momentum 40/60
Momentum60/40
Momentum 80/20
Momentum 95/5
Active/Passive20 / 80
Active/Passive40 / 60
Active/Passive60 / 40
Active/Passive80 / 20
Active/Passive95 / 5
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Ultra Short-Range Short-Range Mid-Range Long-Range
Asset Allocation Portfolios
Figures are based on a recent allocation, and are subject to change. Asset classes shown are Morningstar, Inc. category groups. Allocation of portfolios at the individual account level may vary.
Our model portfolios are designed to put your needs
front and center—where they belong. To select
a portfolio, talk to your financial advisor, who can help
you build a wealth strategy with your long-term
goals in mind.
We offer both taxable and tax-deferred (shown below)
portfolios for investors in non-qualified and qualif-
ied accounts. The taxable versions are designed to avoid
asset classes that are not tax efficient and will
invest in municipal bonds to earn tax-exempt income.
About Morningstar Investment ServicesWe’re committed to helping financial advisors create better outcomes for investors like you.
Together, we offer the professional guidance and access to strategies that can help you achieve your goals. Our model portfolios are designed to be part of a long-term investing plan that helps meet your needs at each stage of your lifetime.
©2015 Morningstar Investment Services, Inc. All rights reserved. The Morningstar name and logo are registered marks of Morningstar, Inc. All other marks are the property of the respective owners. Morningstar Investment Services, Inc. is a registered investment advisor and wholly owned subsidiary of Morningstar, Inc. TAMP-200-010915
22 West Washington Street ChicagoIllinois 60602 USA
+1 877 626–3227 global.morningstar.com/mis mis@morningstar.com
Important InformationIt is important to note that investments in securities (e.g., mutual funds, exchange-traded funds, common stocks) involve risk and will not always be profitable.
Neither diversification nor asset allocation ensure a profit or guarantee against a loss. Morningstar Investment Services does not guar-antee that the results of its advice, recommendations, or the objectives of your portfolio will be achieved. Morningstar Investment Services does not guarantee that negative returns can or will be avoided in any of its portfolios. An investment made in a security may differ substantially from its historical performance and as a result, you may incur a loss. Past performan-ce is no guarantee of future results.
The Morningstar Managed Portfolios program (“Program”) is offered by Morningstar Investment Services and is intended for citizens or legal residents of the United States or its territories. This Program can only be offered by a registered investment advisor or investment advisor representative.
The Program includes various strategies available to individuals and institutions primarily through arrangements Morningstar Investment Services has with various unaffiliated registered investment advisors. Within the Program, Morningstar Invest-ment Services or its investment advisory affiliate provides discretionary investment advisory services.
In addition to the Program, Morningstar Investment Services also offers model portfolios to third-party advisory programs (“Advisory Program”) of financial institutions on a non-discretionary basis as a stra-tegist. Under a strategist arrangement, the Advisory Program has full discretion to invest the Advisory Program client accounts in accordance with the model or deviate from the model provided by Morningstar Investment Services.
Mutual FundPortfoliosRetirement Income
Morningstar Investment Services
Designed for all stages of retirement, each model portfolio in the series follows a targeted, endowment-like approach to help support the shift from accumulating assets to spending them.
The Shift Into Retirement
Retirees often face a quandary—preserving wealth
while achieving the growth needed to sustain
future withdrawals. To help ease the shift into retire-
ment, the portfolios aim to strike a balance
between capital stability and growth by spreading
investments across a broad range of asset
classes. This helps support regular payouts without
courting some risks common to other income-
oriented strategies.
The Total Return Advantage
Many “income” strategies rely on high-yielding bonds,
dividend-paying stocks, or complex securities to
generate payouts. Investors often like this approach,
as it suggests income payments alone can fund
their spending—without dipping into principal. Yet such
income strategies can court excessive risks, with
the potential for jarring volatility. By contrast, a “total
return” approach aims to both generate income
and grow capital, helping retirees avoid the shortcom-
ings of singularly income-focused approaches.
Endowment-Like Approach
The portfolios adapt an approach widely used by
universities and philanthropic organizations, who invest
across a wide variety of asset classes to support
their future spending needs and reinvest the excess back
into the fund, reaping the benefits of compounding.
Like endowments, the portfolios invest not just in tradi-
tional stocks and bonds, but also in less traditional
strategies to help diversify and stabilize their returns
without forsaking the opportunity for growth.
Powerful Asset Class Research
In constructing the portfolios, we start with research
from our affiliate, Ibbotson Associates—a leading
authority on asset allocation. They’ve shown that the
mix of assets in a portfolio can have a greater
impact on investment returns than timing markets
or picking stocks, and they estimate the future
returns and volatility of every asset class we include
in the portfolios. This helps us set expectations
for the spending rate each portfolio will support, and
alter the mix of investments as needed.
Risk-managed portfolios for each stage of retirement
We created the Retirement Income series of portfolios to help deliver a mixof capital appreciation and income to support your spending needs as you move into retirement.
Inside the Retirement Income PortfoliosTo help meet the targeted spending goals, the Retirement Income portfolios invest in stock, bond, and alternative mutual funds, with each type of fund playing its own valuable role.
Stocks: Growth3 Stocks of companies large and small, the world over3 Emphasize undervalued, not just high-yielding, stocks3 Aim to responsibly compound portfolio value
Bonds: Stability3 Widely diversified across sectors, geographies3 Emphasize total return, not yield alone3 Aim to generate income, stabilize portfolio value
Alternatives: Manage Volatility3 Different than traditional stock or bond funds3 Returns less sensitive to broad market currents3 Aim to further diversify, cushion portfolios
Retirement Income Portfolios
Portfolios % Asset Allocation Goal
Retirement Income Long-Range Retirement IncomeMid-Range
Retirement IncomeShort-Range
Retirement IncomeUltra Short-Range
A steady rate of return driven by capital appreciation and income over 20 or more years. Aims to support a 4% annual distribution over this time horizon without fully depleting the account’s assets.
A steady rate of return driven by capital appreciation and income over ten to 20 years. Aims to support a 5% annual distribution over this time horizon without fully depleting the account’s assets.
A steady rate of return driven by income with some potential for capital appreciation over two to 10 years. Aims to support a 6% annual distribution over this time horizon without fully depleting the account’s assets.
Capital preservation and a steady rate of return driven by income over one to five years. Aims to support a 7% annual distribution over this time horizon without fully depleting the account’s assets.
26 U.S. Stocks9 International Stocks4 Real Estate REITS44 Taxable Bonds12 Alternatives5 Short Term Reserves
17 U.S. Stocks8 International Stocks4 Real Estate REITS48 Taxable Bonds18 Alternatives5 Short Term Reserves
7 U.S. Stocks3 International Stocks0 Real Estate REITS69 Taxable Bonds13 Alternatives8 Short Term Reserves
0 U.S. Stocks0 International Stocks0 Real Estate REITS75 Taxable Bonds0 Alternatives25 Short Term Reserves
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Momentum20/80
Momentum 40/60
Momentum60/40
Momentum 80/20
Momentum 95/5
Active/Passive20 / 80
Active/Passive40 / 60
Active/Passive60 / 40
Active/Passive80 / 20
Active/Passive95 / 5
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Ultra Short-Range Short-Range Mid-Range Long-Range
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Momentum20/80
Momentum 40/60
Momentum60/40
Momentum 80/20
Momentum 95/5
Active/Passive20 / 80
Active/Passive40 / 60
Active/Passive60 / 40
Active/Passive80 / 20
Active/Passive95 / 5
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Ultra Short-Range Short-Range Mid-Range Long-Range
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Momentum20/80
Momentum 40/60
Momentum60/40
Momentum 80/20
Momentum 95/5
Active/Passive20 / 80
Active/Passive40 / 60
Active/Passive60 / 40
Active/Passive80 / 20
Active/Passive95 / 5
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Ultra Short-Range Short-Range Mid-Range Long-Range
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Momentum20/80
Momentum 40/60
Momentum60/40
Momentum 80/20
Momentum 95/5
Active/Passive20 / 80
Active/Passive40 / 60
Active/Passive60 / 40
Active/Passive80 / 20
Active/Passive95 / 5
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Ultra Short-Range Short-Range Mid-Range Long-Range
Figures are based on a recent allocation, and are subject to change. Asset classes shown are Morningstar, Inc. category groups. Allocation of portfolios at the individual account level may vary.
U.S. Stocks International Stocks Real Estate REITS Taxable Bonds Alternatives Short Term Reserves
Each portfolio aims to support a targeted annual
distribution over the recommended time horizon while
striving to deliver capital preservation. To help
deliver consistent rates of return and downside pro-
tection, each portfolio may invest in mutual
funds spanning a broad range of market segments.
It’s important to note that in any given year, a portfolio’s
returns could be more or less than the target due to
market fluctuations. Average payouts over a longer time
horizon are more likely to achieve these objectives.
To select a portfolio, talk to your financial advisor, who
can help you build a wealth strategy focused on
your long-term goals.
About Morningstar Investment ServicesWe’re committed to helping financial advisors create better outcomes for investors like you.
Together, we offer the professional guidance and access to strategies that can help you achieve your goals. Our model portfolios are designed to be part of a long-term investing plan that helps meet your needs at each stage of your lifetime.
©2015 Morningstar Investment Services, Inc. All rights reserved. The Morningstar name and logo are registered marks of Morningstar, Inc. All other marks are the property of the respective owners. Morningstar Investment Services, Inc. is a registered investment advisor and wholly owned subsidiary of Morningstar, Inc. TAMP-205-010915
Important Information It is important to note that investments insecurities (e.g., mutual funds, exchange-tradedfunds, common stocks) involve risk and willnot always be profitable.
Neither diversification nor asset allocation ensure a profit or guarantee against a loss. Morningstar Investment Services does not guar-antee that the results of its advice, recommendations, or the objectives of your portfolio will be achieved. Morningstar Investment Services does not guarantee that negative returns can or will be avoided in any of its portfolios. An investment made in a secur-ity may differ substantially from its historical performance and as a result, you may incur a loss. Past performance is no guarantee of future results.
The Morningstar Managed Portfolios program (“Program”) is offered by Morningstar Investment Services and is intended for citizens or legal residents of the United States or its territories. This Program can only be offered by a registered investment advisor or investment advisor representative.
The Program includes various strategies available to individuals and institutions primarily through arrangements Morningstar Investment Services has with various unaffiliated registered investment advisors. Within the Program, Morningstar Invest-ment Services or its investment advisory affiliate provides discretionary investment advisory services.
In addition to the Program, Morningstar Investment Services also offers model portfolios to third-party advisory programs (“Advisory Program”) of financial institutions on a non-discretionary basis as a stra-tegist. Under a strategist arrangement, the Advisory Program has full discretion to invest the Advisory Program client accounts in accordance with the model or deviate from the model provided by Morningstar Investment Services.
22 West Washington Street ChicagoIllinois 60602 USA
+1 877 626–3227 global.morningstar.com/mis mis@morningstar.com
Morningstar Investment Services
Mutual FundPortfoliosAbsolute Return
Invested across global markets and sectors, the Absolute Return model portfolio emphasises a diverse range of alternative investments in pursuit of steady returns and low volatility.
How Absolute Return Works
The Absolute Return portfolio is designed to adapt
to all kinds of market environments, keeping a lid on
volatility and offering a level of downside protection.
Over a full market cycle, it seeks the moderate
returns of a 30% stock/70% bond portfolio—while
investing in alternatives to help minimize the
toll that inflation and rising interest rates can take
on returns.
A “go anywhere” portfolio, Absolute Return allows
fund managers to take advantage of market
opportunities to help compound returns over time.
The Power of Alternatives
‘Alternative’, or non-traditional, investments aren’t
only for the most sophisticated investors anymore. In fact,
we think they’re now an essential part of a modern
portfolio. Because they don’t typically move in lockstep
with other parts of a traditional portfolio, alternatives
offer the potential to boost overall portfolio returns
while reducing risk.
The Absolute Return portfolio combines traditional
and alternative mutual funds with low correlations to
each other and to the broad markets, offering
highly diversified exposure across geographies, sectors,
and time horizons.
Designed to adapt to shifts in the market
The Absolute Return portfolio uses a broad range of alternative investmentsto help deliver moderate, consistent returns whether the stock market is moving up or down.
Goals of Absolute Return: Diversify, Protect, GrowThe strategy is designed to capture opportunities in strong market environments—and provide downside protection in weaker ones.
Diversify3 Incorporate alternatives that may have lower
correlation to broader market cycles3 Invest in a wide range of global securities
and sectors
Protect3 Buffer against sharp volatility and drawdowns3 Help portfolios weather sudden bear markets
Grow3 Pursue timely opportunities free from traditional
benchmark constraints3 Risk-aware managers use distinctive strategies
to help add value
Research You Can Trust Only the investments we have the most confidence
in make it into the Absolute Return portfolio. Starting
with unbiased Morningstar, Inc. data, we use a
proprietary evaluation system to identify managers who
employ a prudent, repeatable investment process that
has yielded strong results over time.
Face-to-Face Investing
When we research a fund, we want to understand
the firm and the people behind it. We meet one-on-one
with fund managers to uncover how they make decisions.
We look for those who ‘eat their own cooking’ by
investing their own personal savings in the funds they
oversee. Then, we assemble the investments into
a portfolio—and manage it actively to ensure that it’s
positioned to help meet the goals we’ve set for it.
Who is Absolute Return for?
Absolute return is well-suited to play a role in many
types of investors’ portfolios. For example, it may be used
as a core holding, creating a low-volatility anchor for
a portfolio with the potential for standalone downside
protection. For others, it can be can be used as a
satellite holding to help enhance overall diversification.
It may also appeal to conservative investors, includ-
ing those who are just entering the market. Finally, it can
help investors in retirement—who have less tolerance
for volatility or capital losses—make regular distributions
less disruptive.
To select a portfolio, talk to your financial advisor,
who can help you build a wealth strategy focused on
your long-term goals.
Neither diversification nor asset allocation ensure a profit or guarantee against a loss. This portfolio may not be suitable for all investors. In particular, it is not appropriate for short-term investments, and you could lose money by investing in it.
Inside the Absolute Return PortfolioTo help meet targeted risk and return objectives and maintain a low correlation to traditional stock and bond markets, the strategy uses funds that tend to fall into one of three categories:
3 Opportunistic Funds The managers of these funds invest across multiple asset classes. Each manager may employ a range of techniques as they seek to generate targeted levels of absolute, not relative, return.
3 Non-traditional Diversifiers These strategies focus on minimizing correlations to broad asset classes—particularly global stocks and bonds. To select them, we look carefully at funds’ historical correlations to the broad markets—and to each other.
3 Stabilizers Funds in this category tend to act as
“shock absorbers”. They are designed to minimize volatility and drawdowns relative to the U.S. fixed income or U.S. equity markets.
About Morningstar Investment ServicesWe’re committed to helping financial advisors create better outcomes for investors like you.
Together, we offer the professional guidance and access to strategies that can help you achieve your goals. Our model portfolios are designed to be part of a long-term investing plan that helps meet your needs at each stage of your lifetime.
©2015 Morningstar Investment Services, Inc. All rights reserved. The Morningstar name and logo are registered marks of Morningstar, Inc. All other marks are the property of the respective owners. Morningstar Investment Services, Inc. is a registered investment advisor and wholly owned subsidiary of Morningstar, Inc. Please note that portfolio availability may vary by business relationship. Contact your financial advisor for details. TAMP-202-010915
Important InformationIt is important to note that investments insecurities (e.g., mutual funds, exchange-tradedfunds, common stocks) involve risk and willnot always be profitable.
Neither diversification nor asset allocation ensure a profit or guarantee against a loss. Morningstar Investment Services does not guar-antee that the results of its advice, recommendations, or the objectives of your portfolio will be achieved. Morningstar Investment Services does not guarantee that negative returns can or will be avoided in any of its portfolios. An investment made in a secur-ity may differ substantially from its historical performance and as a result, you may incur a loss. Past performance is no guarantee of future results.
The Program includes various strategies available to individuals and institutions primarily through arrangements Morningstar Investment Services has with various unaffiliated registered investment advisors. Within the Program, Morningstar Invest-ment Services or its investment advisory affiliate provides discretionary investment advisory services.
In addition to the Program, Morningstar Investment Services also offers model portfolios to third-party advisory programs (“Advisory Program”) of financial institutions on a non-discretionary basis as a stra-tegist. Under a strategist arrangement, the Advisory Program has full discretion to invest the Advisory Program client accounts in accordance with the model or deviate from the model provided by Morningstar Investment Services.
22 West Washington Street ChicagoIllinois 60602 USA
+1 877 626–3227 global.morningstar.com/mis mis@morningstar.com
Ibbotson PortfoliosActive/Passive
Morningstar Investment Services
Active or passive management? We tap into the strengths of both approaches in five model portfolios that span the risk spectrum.
Ibbotson Asset Allocation
In investing, the essentials matter. Ibbotson
Associates—a leading authority on asset allocation—
starts with proprietary research showing that the mix
of assets in a portfolio can have a greater impact
on investment returns than timing markets or picking
stocks. Ibbotson uses risk and return forecasts as
a guide to develop a diversified strategic allocation for
each portfolio, including up to 19 asset classes.
Active Management
“Active” mutual fund managers seek to outperform a
benchmark. To select securities, they use both research
and their own experience as a guide. To build each
portfolio, Ibbotson Associates examine each fund’s hold-
ings and returns to determine how effective a mutual
fund manager may be. They also consider a manager’s
investment philosophy, process, and the strength
of their management team. Finally, they review costs,
ensuring that each fund’s fee appears reasonable
for the return potential they offer.
Passive Management
“Passive” investments seek to replicate the performance
of an index for a low fee, using exchange-traded
funds (ETFs) and/or indexed mutual funds. Because they
demand less research and analysis than actively
managed funds, they’re very cost-effective, with lower
portfolio turnover and more favorable tax consequences.
To build each portfolio, Ibbotson chooses passive
investments that closely track their asset class or bench-
mark index.
Getting the Most From Each Approach Ibbotson carefully monitors the overall risk level of a
portfolio when combining active and passive strategies.
They select actively managed funds in areas where a
skilled manager’s research and knowledge has the poten-
tial to boost performance, such as emerging markets
or small-cap stocks. In areas in which manager skill is
less likely to affect performance—such as government
bonds—they favor lower-cost passive investments.
Integrated strategies designed to offer you the best of both approaches
Our affiliate Ibbotson Associates manages each portfolio using active invest-ments to increase a portfolio’s potential for returns, and passive investments to help keep a portfolio diversified, low-cost, and tax-efficient.
Combining Active and PassiveIbbotson Associates uses actively managed funds to invest in asset classes in which
they think a manager can add value. Because active managers take on greater
risk in pursuit of greater return, the more aggressive the portfolio, the larger proportion
of actively managed funds it’s likely to hold.
Active/Passive 20/80
Active/Passive 40/60
Active/Passive 60/40
Active/Passive 80/20
Active/Passive 95/5
Portfolios
More Active
Less Active
Less Passive
More Passive
3Conservative Portfolios: Greater amounts of passive index funds3Aggressive Portfolios: Greater amount of active funds
For illustrative purposes only.
Portfolios % A P Asset Allocation Goal
Active/Passive95/5
Active/Passive80/20
Active/Passive60/40
Active/Passive40/60
Active/Passive20/80
Long-term capital appreciation. Designed to allow investors to participate fully in the growth the stock market can offer, the portfolio invests primarily in domestic and foreign equities.
Long-term capital appreciation. Allows investors to take advantage of the potential for stock market growth by investing primarily in domestic and foreign equities.
Long-term growth with moderate volatility. Built with a focus on providing balanced and varied exposure by investing in both equity and fixed-income securities.
Moderate capital appreciation combined with current income. Combines the growth potential of equities with the balance that fixed-income securities can provide.
Protection from capital loss and a safeguard against inflation. Invested in fixed-income and equity securities, it’s best- suited for investors who value current income and stability over all else.
52 37 15 U.S. Stocks29 24 5 International Stocks6 6 – Real Estate REITS2 2 – Taxable Bonds9 6 3 Alternatives2 – 2 Short Term Reserves
44 29 15 U.S. Stocks24 20 4 International Stocks5 5 – Real Estate REITS17 10 7 Taxable Bonds8 5 3 Alternatives2 – 2 Short Term Reserves
37 22 15 U.S. Stocks16 13 3 International Stocks3 3 – Real Estate REITS36 18 18 Taxable Bonds6 4 2 Alternatives2 – 2 Short Term Reserves
27 15 12 U.S. Stocks10 8 2 International Stocks2 2 – Real Estate REITS56 24 32 Taxable Bonds2 – 2 Alternatives3 – 3 Short Term Reserves
14 7 7 U.S. Stocks5 5 – International Stocks– – – Real Estate REITS71 27 44 Taxable Bonds2 – 2 Alternatives8 – 8 Short Term Reserves
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Momentum20/80
Momentum 40/60
Momentum60/40
Momentum 80/20
Momentum 95/5
Active/Passive20 / 80
Active/Passive40 / 60
Active/Passive60 / 40
Active/Passive80 / 20
Active/Passive95 / 5
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Ultra Short-Range Short-Range Mid-Range Long-Range
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Momentum20/80
Momentum 40/60
Momentum60/40
Momentum 80/20
Momentum 95/5
Active/Passive20 / 80
Active/Passive40 / 60
Active/Passive60 / 40
Active/Passive80 / 20
Active/Passive95 / 5
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Ultra Short-Range Short-Range Mid-Range Long-Range
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Momentum20/80
Momentum 40/60
Momentum60/40
Momentum 80/20
Momentum 95/5
Active/Passive20 / 80
Active/Passive40 / 60
Active/Passive60 / 40
Active/Passive80 / 20
Active/Passive95 / 5
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Ultra Short-Range Short-Range Mid-Range Long-Range
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Momentum20/80
Momentum 40/60
Momentum60/40
Momentum 80/20
Momentum 95/5
Active/Passive20 / 80
Active/Passive40 / 60
Active/Passive60 / 40
Active/Passive80 / 20
Active/Passive95 / 5
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Ultra Short-Range Short-Range Mid-Range Long-Range
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Momentum20/80
Momentum 40/60
Momentum60/40
Momentum 80/20
Momentum 95/5
Active/Passive20 / 80
Active/Passive40 / 60
Active/Passive60 / 40
Active/Passive80 / 20
Active/Passive95 / 5
Conservative Income & Growth
Moderate Growth
Growth Aggressive Growth
Ultra Short-Range Short-Range Mid-Range Long-Range
Active/Passive Portfolios(Tax-Deferred)
Note that the passive portion of a portfolio may be invested in a combination of indexed mutual funds and ETFs, or simply indexed mutual funds, depending on custodial arrangement.Weightings are subject to change. Figures are based on a recent allocation, and are subject to change. Asset classes shown are Morningstar, Inc. category groups. Allocations of portfolios at the individual account level my vary.
A Active P Passive
Equity / Fixed Income
U.S. Stocks International Stocks Real Estate REITS Taxable Bonds Alternatives Short Term Reserves
Each model portfolio is carefully designed to put your
needs front and center—where they belong. We
think your portfolio should be working for you no matter
what investment approach or style is in favor at
any given time. That’s why they’re broadly diversified
across asset classes, managers, and investment styles.
To select a portfolio, talk to your financial advisor,
who can help you build a wealth strategy focused on
your long-term goals.
About Morningstar Investment ServicesWe’re committed to helping financial advisors create better outcomes for investors like you.
Together, we offer the professional guidance and access to strategies that can help you achieve your goals. Our model portfolios are designed to be part of a long-term investing plan that helps meet your needs at each stage of your lifetime.
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Important InformationIt is important to note that investments in securities (e.g., mutual funds, exchange-traded funds, common stocks) involve risk and will not always be profitable.
ETFs, like all investments, carry certain risks that may adversely affect their net asset value, market price, and/or performance. An ETF’s net asset value (NAV) will fluctuate in response to market activity. Because ETFs are traded through- out the day and the price is determined by market forces, the market price you pay for an ETF may be more or less than the net asset value. Because ETFs are not actively managed, their value may be affected by a general decline in the U.S. market segments relating to their underlyingindexes. Similarly, an imperfect match between an ETF’s holdings and those of its underlying index may cause its performance to not match the performance of its underlying index. Like other concentrated investments, an ETF with concentrated holdings may be more vulnerable to specific economic, political, or regulatory events than an ETF that mirrors the general U.S. market.
Neither diversification nor asset allocation ensure a profit or guarantee against a loss. Neither Morningstar Investment Services nor Ibbotson Associates guarantee that the results of its advice, recommendations, or the objectives of your portfolio will be achieved. Neither Morningstar Investment Services nor Ibbotson Associates guarantee that negative returns can or will be avoided in any of its portfolios.
An investment made in a security may differ substantially from its historical performance and as a result, you may incur a loss. Past perform-ance is no guarantee of future results.
The Morningstar Managed Portfolios program (“Program”) is offered by Morningstar Investment Services and is intended for citizens or legal residents of the United States or its territories. This Program can only be offered by a registered investment advisor or investment advisor representative.
Both Morningstar Investment Services and Ibboston Associates are registered investment advisers and wholly-owned subsidiaries of Morningstar, Inc. Ibbotson Associates manages the Active/Passive portfolios, and serves as a sub-advisor to the Program.
The Program includes various strategies available to individuals and institutions primarily through arrangements Morningstar Investment Services has with various unaffiliated registered investment advisors. Within the Program, Morningstar Invest-ment Services or its investment advisory affiliate provides discretionary investment advisory services.
In addition to the Program, Morningstar Investment Services also offers model portfolios to third-party advisory programs (“Advisory Program”) of financial institutions on a non-discretionary basis as a stra-tegist. Under a strategist arrangement, the Advisory Program has full discretion to invest the Advisory Program client accounts in accordance with the model or deviate from the model provided by Morningstar Investment Services.
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