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Fund Spy

Quality Quicksand

Are the market's financially healthy laggards finally poised to lead?

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In the upcoming issue of Morningstar FundInvestor, I take a look at the risk of quality at a pair of funds that, despite portfolios stuffed with financially healthy overachievers, have languished in recent years, at least in relative terms. Amid a rally paced by more-speculative fare, that's not much of a surprise. Indeed, that in a nutshell is the risk of quality: the likelihood of underperformance when the fear/greed pendulum swings toward greed.

In conducting research for the article, I used's Premium Stock Screener to zero in on those areas of the Morningstar Style Box that are currently loaded with quality and those that are relatively bereft of it. Once the results were in, I gave Morningstar's director of fund research, Russ Kinnel, a single-question pop quiz: Which areas of the style box did he think were the least and most quality-centric?

Kinnel's response and the full results appear below. But try to resist scrolling down without first jotting down your response to that same question.

Shannon Zimmerman does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.