Value, Growth or "Core?"

[Rich_by_the_Bay]

I've pretty much concluded as an investment novice that the definition of growth versus value investmentsis a pretty amorphous concept which even the experts disagree on. So, I just trust that whatever Vgd says it is, it is.

But recently I started prowling around Morningstar and see that in their style boxes ("x-rays") they use the term Core, too. It seems to be an intermediate style between the other two. Now I really can't figure out how I am weighted among the 3 styles.

Can anyone tell me what Core means? If I have say 33% of each of the 3 styles, am I neutral between growth and value?

 

[cute fuzzy bunny]

Sounds like a functional equivalent to "blend", although I dont know why they'd go off and make up their own thing...wha?..Oh yeah...nevermind...its boring to do things the way people are familiar with and you cant brand anything thats a common concept.

 

[Olav23]

CFB is correct, they call blend "core" for some reason, in certain places. If you want to see the actual analysis of how they compute growth/blend/value, here is the explanation:

http://corporate.morningstar.com/US...FactSheets/MorningstarStyleBox_FactSheet_.pdf

Basically, a couple of weighted fundamental measures that you would expect, Earnings growth, book value, etc.

 

[Rich_by_the_Bay]

If you want to see the actual analysis of how they compute growth/blend/value, here is the explanation:

http://corporate.morningstar.com/US...FactSheets/MorningstarStyleBox_FactSheet_.pdf

Thanks, Olav23. I'll read it over - probably just split the difference and allocate the Core holdings 50:50 to growth and value for simplicity -- never heard of a "core index fund."

 

[JohnEyles]

CFB is correct, they call blend "core" for some reason, in certain places. If you want to see the actual analysis of how they compute growth/blend/value, here is the explanation:

http://corporate.morningstar.com/US...FactSheets/MorningstarStyleBox_FactSheet_.pdf

From my reading, it doesn't so much look like they're synonymous as that the term
"blend" is used for a fund and "core" for a stock. But I'd agree that it seems like if
you're trying to compute your split that "core" stocks should be labeled "blend" to
make the value/blend/growth ratios come out right.

 

[Animorph]

Morningstar "core" stocks or funds are ones that could be relied upon to form the core of your portfolio. Probably the slower moving, wider "moat" stocks among those they like. The style box classification is entirely different, though it is likely that core stocks and funds will be more large cap S&P500 oriented. It is not an indicator of the blend style.

Dan

 

[Rich_by_the_Bay]

Morningstar "core" stocks or funds are ones that could be relied upon to form the core of your portfolio. Probably the slower moving, wider "moat" stocks among those they like. The style box classification is entirely different, though it is likely that core stocks and funds will be more large cap S&P500 oriented. It is not an indicator of the blend style.

Dan, that's not consistent with my read of the article referenced above by Olav23. Where did you get this information from?

Even Vgd small cap index has 20% Core per Morningstar. Sounds like it means blend indeed, as applied to a fund.

 

[saluki9]

From a portfolio management standpoint core can mean both "a core holding" or describe a stock that is not clearly growth or value.

This for example explains why the Russell indexes (growth & Value) have some overlap, because many companies aren't growth or value.

 

[Animorph]

Weird, never seen them use it that way before! Been a while since I worried about individual stocks much I guess. Indeed, if you look at the premium stock screener, "core" replaces "blend" for the middle column of the style box in the possible style selections. So for individual stocks, "core" is a stock in between growth and value, and may be large, mid, or small cap.

I was thinking about their designation of "core" funds in particular, the heart of the portfolio. As in:
"Role in Portfolio
A guide to assist with portfolio allocation, funds can be designated core, supporting player or specialty. Core funds should be the bulk of an investor's portfolio, while supporting players contribute to a portfolio, but are secondary to the core. Specialty offerings tend to be speculative, and should typically only be a small portion of investors' portfolios."

Dan

 

[Rich_by_the_Bay]

From a portfolio management standpoint core can mean both "a core holding" or describe a stock that is not clearly growth or value.

Thanks, Saluki. That's what I inferred.

Since many investors just want to balance "growth and value" how would you handle "Core" style holdings in designing your allocation from this standpoint. I'm inclined to just ignore Core and look at the other two. Reasonable?

 

[cute fuzzy bunny]

Slicing it that thinly, its entirely likely that a good size chunk of 'core' stocks, those neither clearly value or growth...become one or the other in fairly short order...