How to Read a Style Guide

By Mark Druskoff

A style guide first shows the size of the companies in which the fund invests, based on market capitalization, which changes with the market. In the case of the style guide used by the Thrivent Mutual Fund family, size breaks down as follows:

Large Cap (> $14 Billion): The largest companies in the U.S., these are often the most recognizable. They are generally included in the S&P 500 Index and tend to have less volatility because of diversification of the company’s lines of business.

Mid Cap (Between $3 billion and $14 Billion) These companies resemble small-cap companies in many ways, but often have access to greater financial resources and have developed a more established business model than small cap firms. They also may be included in the S&P MidCap 400 Index.

Small Cap (< $3 Billion) Often a small cap’s business is highly concentrated in one area or product, and as a result, their operations and stock prices can be subject to greater volatility than larger companies. These are companies that are generally included in the S&P SmallCap Index.

The portfolio’s investment style—value, blend or growth—focuses on the relative financial characteristics of companies, based on calculations such as the price-to-earnings (P/E) ratio. The higher a company’s P/E ratio, the more the market is willing to pay for each dollar of annual earnings—and the higher its perceived value as an investment.

Value: An investment approach focused on finding good investments at a great price, perhaps as measured by P/E ratios or some other financial metric.

Growth: An investment approach focused on selecting companies with strong prospects for growth in revenues and earnings.

Blend: An investment approach that combines growth and value stocks. These also are known as “core” portfolios.

Mark Druskoff is a freelance writer from Minneapolis, Minnesota.

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