ACTIONABLE ADVICE FOR FINANCIAL ADVISORS: Newsletters and Commentaries Focused on Investment Strategy

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Classifications


The determination of capitalization for equity securities depends on the domicile of the securities that are being analyzed, as follows:

Domestic Stocks & Stock Funds
SizeMarket Capitalization*
Large Cap
Mid Cap
Small Cap
> $10.0 Billion
<$1.5 Billion and <=$10.0 Billion
<=$1.5 Billion


Developed Foreign & Emerging Market Stock Funds
SizeMarket Capitalization*
Large Cap
Mid Cap
Small Cap
> $5.0 Billion
<$1.0 Billion and <=$5.0 Billion
<=$1.0 Billion

Since investors typically hold multiple accounts, the investible assets of the investors in the universe are many times greater than the average account size given above.

All of the accounts are attributable to individual investors whose assets are provided by a third party, typically a Registered Investment Advisor (RIA), family office, or back-office service provider.

Advisor Perspectives examines marketable securities. Alternative investments (e.g., hedge funds, private equity, venture capital) are not included in Asset Allocation or Most Popular Mutual Fund pages.

Annuities, retirement accounts, and non-term life insurance are classified, to the extent possible, based on their underlying assets. In some cases these assets are marketable securities. In other cases, where only the asset classifications (e.g., stocks, bonds, cash) of the underlying assets is known, those asset classifications are used in the Asset Allocation data. If the underlying assets cannot be classified, they are not included in the universe.

*Note for mutual funds, we use weighted average market capitalization when available.

For domestic securities the determination of style (Growth, Value or Blend) is based on an evaluation of the price-to-earnings and price-to-book values for the security relative to other securities. A style score is computed from this and other fundamental information and each security is assigned a style category based on where its score falls in the total distribution of unique style scores for domestic stocks and stock funds. For example, those securities with scores that comprise the highest 25% of the total distribution will be assigned a Growth style.

StyleStyle Score Percentile
Growth
Blend
Value
Top 25%
Middle 50%
Bottom 25%

Bond quality classifications are based on the following:

QualityRating
Investment GradeAAA or AA
Mid GradeA or BBB
High YieldAll others

Bond maturity classifications are based on duration, which is a measure of interest rate sensitivity. Duration correlates to maturity, and the classifications by maturity are generally equivalent to the following:

ClassificationMaturity
Short Term< 4 years
Medium Term4-10 years
Long Term> 10 years

Foreign stock funds are classified as developed or emerging based on the objective or description of the fund, as follows:

ClassificationMarket
EmergingMexico, India, Malaysia, China, Indonesia, Turkey, Brazil, Philippines, Chile, Thailand, Russia, Poland, Argentina, Hungary, Peru, Czech, Ivory Coast, Egypt, So. Africa, Morocco, Israel, Romania, Nigeria
DevelopedEuropean, Global, Pacific, Foreign


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