Course 208: Examining a Stock Fund's Portfolio, Part 2
Sector Weightings
In this course
1 Introduction
2 Sector Weightings
3 Average Market Capitalization
4 Price/Earnings and Price/Book Ratios
5 Number of Holdings
6 Turnover Rates

Both Meridian Value (MVALX) and FAM Value (FAMVX) land in the mid-cap growth square of the style box, but the funds have different biases. With more than 37% of its portfolio devoted to industrials (as of December 2010), the Meridian fund is heavily exposed to the ups and downs of that sector. Meanwhile, FAM Value favors financial firms, with more than 33% of its assets in that sector as of March 2011.

Welcome to one of our favorite portfolio statistics: sector weightings. Stocks fall into one of three "super" sectors-cyclical, sensitive, and defensive-which are subdivided into sectors, bringing the total number of sectors to 11. The cyclical supersector includes the basic materials, consumer cyclical, financial services, and real estate sectors. In the sensitive supersector, there are the communication services, energy, industrials, and technology sectors. And finally, in the defensive supersector, there are the consumer defensive, health-care, and utilities sectors. Morningstar calculates a fund's sector exposure based on the amount of assets it has in stocks in each sector. By knowing how heavily a fund invests in a given sector, you'll know how vulnerable it is to a downturn in that part of the market or how much sector risk it's taking on.

Next: Average Market Capitalization >>


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