Morningstar Runs the Numbers

Inspired by Harper's Index (with a tip of the hat to FiveThirtyEight's Significant Digits blog), Morningstar Runs the Numbers uses a numbers-based approach to highlight recent Morningstar research, along with some outside news stories.

100 On Nov. 1, 2016, we unveiled Morningstar Analyst Ratings for more than 250 exchange-traded funds listed around the world, including 100-plus U.S.-listed funds.

"The Morningstar Analyst Rating--which follows a Gold, Silver, Bronze, Neutral, and Negative scale--is forward-looking. It expresses our analysts' conviction in a fund's ability to beat its peers after accounting for fees and risk over a market cycle.

"Using the Analyst Rating, we believe investors can make more-sound decisions about which ETFs to choose or avoid… [and] it should also make it easier for investors to compare ETFs against relevant mutual funds."

$81 Billion Nontraditional bond funds have $19.6 billion in net outflows through September. That's the third highest of any category. On the flip side, intermediate-term bond funds have $81 billion in inflows--the most of any category. So, clearly people have decided traditional is better than nontraditional. Or, you could say, constrained is better than unconstrained. Access the full Morningstar U.S. Asset Flows Update here.

161,000 The U.S. economy added 161,000 jobs in October. That number was slightly above what director of economic analysis Bob Johnson was expecting, but it was well below consensus estimates.

"It's another month of relatively slow growth, kind of the new normal ... kind of disappointing to some; it certainly doesn't look like the 190,000 jobs we've been adding on average over the last 12 months, but it's certainly not a disaster number either."

108 Years After years of "futility and heartbreak," the Chicago Cubs finally won the World Series, defeating the Cleveland Indians 8-7 in the 10th inning.

"The Cubs [held] their breath in the bottom of the inning when Davis hit a run-scoring single to pull the Indians to a run behind. But reliever Mike Montgomery replaced Carl Edwards and got Michael Martinez to hit a slow roller into the infield. Third baseman Kris Bryant scooped it up and threw across to first baseman Anthony Rizzo.

"As the ball made its flight across the diamond, the stadium went silent for one of only a few times all night--and only until it settled into Rizzo's glove. Then the huge contingent of Cubs fans erupted, and the players raced to the middle of the infield to celebrate."

2.25% The Federal Reserve chose to maintain the Fed funds rate at a target range of 0.25%-0.50% at its November meeting Wednesday, as inflation expectations remain below the central bank's 2% target and the unemployment rate remained stable. Morningstar senior equity analyst Jim Sinegal noted that the committee also reaffirmed its belief that the path of rate normalization will be gradual and that the Fed funds rate is likely to remain below long-run levels for an extended period.

"We expect the federal-funds rate to reach just 2.25% by 2020, and incorporate this slow glide path into our bank earnings forecasts and fair value estimates."

2.2% When the Fed raises rates, it has the largest effect on the short-term part of the yield curve. What will a Fed rate hike mean for the broader bond markets? It depends, says Morningstar senior analyst Eric Jacobson. The bond market doesn't respond the same way to every stretch of rate hikes, Jacobson points out: Whether investors believe the Fed is acting too quickly, too slowly, or perhaps not enough can make all the difference.

"Although their longer maturities meant they didn't escape volatility, yields for 10- and 30-year Treasuries didn't rise anywhere near as much as the federal-funds rate did [during the slow rate rise between 2004-06]. Prices fell for bonds in both tenors, but factoring in interest, the 10-year bond lost 1.7% for that period, while the 30-year bond actually gained 2.2%."

$5.9 Billion

"Broadcom expects the deal to be accretive to adjusted gross margins and operating margins. Brocade's FC storage area network, or SAN, business is highly profitable as the legacy connectivity standard of choice in enterprise storage systems. Although this business is in secular decline, we calculate that Broadcom is paying less than 7 times adjusted EBITDA for a business that won't go away anytime soon."

25% Salesforce.com is attractively valued, currently trading at a nearly 25% discount to Morningstar equity analyst Rodney Nelson's fair value estimate. The wide-moat firm boasts massive growth and profitability opportunities, he says:

"[Salesforce.com] has been a pioneer in cloud-based software, and now holds an increasingly dominant position across the entire customer relationship management space. As enterprises continue to migrate legacy applications to the cloud, we believe Salesforce will be one of the prime beneficiaries.

3/4 This week Morningstar director of personal finance Christine Benz discusses what high-deductible healthcare plans are and how to get more out of health savings accounts. HDHPs and HSAs have been quickly gaining traction on employee benefits menus, Benz says:

"Just 2% of employers offered HDHPs in 2002; by 2014, three fourths of employers were offering such plans. Twenty-four percent of workers were covered by an HDHP in 2015, according to data from the Kaiser Family Foundation; 10 years ago, just 4% of workers were covered by an HDHP."

Most Popular Articles, Videos, and Securities

Most Popular Articles

• These 3 ETFs Are Top Options in Their Categories
• Vanguard Goes Active With New Core Bond Fund
• Introducing the Morningstar Analyst Rating for ETFs
• What History Tells Us About the Impact of a Fed Rate Hike
• A Rundown of Impending Mutual Fund Capital Gains Distributions

Most Popular Videos

• Johnson: One of the Worst GDP Reports in Some Time
• Scary Valuations for These Two Companies
• 4 Newly Rated Funds, but Only 2 Make the Grade
• A Sensible Small-Cap Option for Conservative Investors
• Modest COLA Hike Means Higher Medicare Part B Premiums

Most Requested Stock Quotes Apple AT&T Old Republic International Amazon Pfzier

Most Requested Stock Analyses

Amgen

McKesson

Allergan

Gilead

Express Scripts

Most Requested Fund Quotes Vanguard 500 Index Vanguard Dividend Growth Fidelity Contrafund Vanguard Wellesley Income Vanguard Wellington

Most Requested Fund Analyses

T. Rowe Price Capital Appreciation

Vanguard Wellesley Income

Fidelity Contrafund

Vanguard Inflation-Protected Securities

T. Rowe Price Health Sciences

Most Requested ETF Quotes SPDR S&P 500 Vanguard REIT ETF Vanguard Total Stock Market ETF Vanguard High Dividend Yield ETF Vanguard Dividend Appreciation

Most Requested ETF Analyses

Vanguard REIT ETF

iShares Core S&P Small-Cap

Vanguard High Dividend Yield ETF

Schwab US Dividend Equity ETF

Vanguard Dividend Appreciation ETF