This section displays the percentage of domestic stock holdings within the portfolio that are invested in each type. The sum of the individual type weightings for each domestic stock holding multiplied by the weight (%) each holding takes up in the domestic stock portion of the portfolio equals the portfolio weighting for each type. The percentage of each type that comprises the S&P 500 index is also listed. Morningstar uses eight types to classify companies based on where they are in their economic life cycles or by the underlying economic force driving their earnings. The eight Stock Types and their definitions are as follows:
Aggressive Growth
Companies whose revenues and earnings have both been growing significantly faster than the general economy.
Classic Growth
Companies that are growing respectably faster than the general economy, and often pay a steady dividend. They tend to be mature and solidly profitable businesses.
Slow Growth
Companies that have shown slow revenue and earnings growth (typically less than the rate of GDP growth) over at least three years.
Speculative Growth
Companies that have shown strong revenue growth but slower or spotty earnings growth. Very small or young companies also tend to fall into this class.
Cyclical
Companies in the cyclicals and durables sectors, except those in the three types below. The profits of cyclicals tend to rise and fall with the general economy.
Distressed
Companies that have had consistently declining cash flows and earnings over the past three years, and/or very high debt.
Companies that deal in assets such as oil, metals, and real estate, which tend to do well in inflationary environments.
High Yield
Companies that have dividend yields at least twice the average for large-cap stocks. They tend to be mature, slow-growing companies.