The Morningstar Style Box for Alternative Funds
This new framework provides an easy-to-understand visual representation of an alternative fund's diversification and volatility characteristics.
Jason Kephart: The Morningstar Style Box for alternative funds is a tool to help investors make better portfolio allocation decisions. Most investors choose to use alternative funds for their diversifying characteristics, but it's not always easy to tell what those characteristics are from looking at a fund's name or which category it's in. That's where the alternatives style box could help.
The alternatives style box is a two-factor map of what we consider to be the most important characteristics investors should keep in mind when choosing an alternatives fund. The Y-axis is a measure of a fund's correlation to the Morningstar Global Equity Markets Index, a market-cap weighted global equity index. The X-axis measures a fund's relative volatility to the equity markets. This gives a sense of how volatile a fund has been compared to equities. We chose global equities as our measuring stick because that is likely to be the most volatile part of every portfolio. If reducing portfolio-level risk through diversification is the goal, then investors need to be mindful of how a strategy relates to the equity market.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.