Premium Fund Selector: Try This at Home

Morningstar fund analysts are fond of comparing a given mutual fund to its relevant peer group. The style box provides a broad-strokes way of doing that, of course, but often it's useful to have more refined points of comparison.

After all, a percentile rank in a given category will only tell you how a particular fund has performed relative to a universe of funds with similar valuation and size metrics. That's helpful, but suppose that the hot-performing large-growth fund you're considering has a fat cash stake of 25%?

In a bear market like the one we've been in for quite a while, such a cautious stance would just about automatically give the offering a leg up on the competition, but it may also cause the fund to lag its rivals when the market rallies. Of course, the fund might be a strong pick nonetheless, but in order to come to a meaningful conclusion about that, it would be useful to see how the fund fared not only relative to all large-growth funds, but also within a narrower universe of large-growth funds with similar cash stakes.

Enter Morningstar's  Premium Fund Selector. This newly enhanced tool is a benefit of Premium Membership. (If you're not a Premium Member yet, you can sample the benefits for free with a trial membership.) Premium Fund Selector allows users to build their own screens by using any combination of hundreds of data points. A screen like the one described above would be exceedingly simple to build. Using the tool's drop-down lists, you'd assemble it like so:

Fund Category = Large Growth
and % Cash >= 25
and Distinct Portfolio Only = Yes

(The Distinct Portfolio Only criterion ensures that your search won't return multiple share classes of the same fund.)

Click here to run this screen yourself.

After clicking the view results button, the tool returns a list of funds that meet your criteria. Along with other information, star ratings appear next to the fund names, which are hyperlinked to corresponding Morningstar.com Quicktake Reports--a perfect jumping-off point for additional research. You can even save your screen for quick reference later.

Building more refined searches is similarly foolproof. Say you want to find an above-average small-growth fund with low expenses and a management team that's been on the job for more than five years. No problem. Just choose the following criteria from the Premium Tool Selector's menu:

Fund Category = Small Growth
and 5 Year Return > Category average
and Fund Manager Tenure > 5
and Expense Ratio < Category average
and Distinct Portfolio Only = Yes

Click here to run this screen yourself.

The tool also comes with a collection of preset screens that provides quick and easy access to lists of everything from funds to use as "Portfolio Anchors" (large-blend offerings with top-half returns and low expenses) to "Standout Muni-National Funds" (topnotch bond funds that are exempt from federal income taxes). And for those who like to look under the hood, the preset screens provide a toggle between results and search criteria, so you can mull and learn from the screen that produced the list.

Ingenious, no? And all from the safety of your favorite desk chair.