Morningstar stock classifications

Market Capitalization

Morningstar ties market capitalization to the relative movements of the market. The top 5% of the 5,000 largest stocks in Morningstar's equity database are classified as large-cap stocks. The next 15% of the 5,000 largest stocks are classified as mid-cap stocks. The remaining 80% of the 5,000 largest stocks (as well as companies that fall outside of the largest 5,000) are classified as small-cap stocks. Morningstar then determines a fund's market capitalization by ranking the stocks in a fund's portfolio from the largest market-capitalized stock to the smallest market-capitalized stock, and then calculating the average weighted market capitalization of the stocks in the middle quintile (middle 40th percentile to 60th percentile) of the portfolio. After a fund's market cap has been determined, Morningstar places the fund in the large-, mid-, or small-cap group.

Morningstar determines style exposure through the use of relative price/earnings and price/book ratios.