Star Fund Question (VGSTX)

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Saphomd
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Star Fund Question (VGSTX)

Post by Saphomd » Mon Dec 26, 2016 4:14 pm

I read somewhere from Morningstar that the Star fund has a 108% downside capture compared to other balanced funds. Can someone please explain what downside capture means? Is it because the Star fund invests in "Vanguard funds" instead of equities? (Like the VG Balanced index or Wellington).

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Phineas J. Whoopee
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Re: Star Fund Question (VGSTX)

Post by Phineas J. Whoopee » Mon Dec 26, 2016 4:59 pm

Saphomd wrote:I read somewhere from Morningstar that the Star fund has a 108% downside capture compared to other balanced funds. Can someone please explain what downside capture means? Is it because the Star fund invests in "Vanguard funds" instead of equities? (Like the VG Balanced index or Wellington).
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Investopedia wrote:The down-market capture ratio is a statistical measure of an investment manager's overall performance in down-markets. The down-market capture ratio is used to evaluate how well or poorly an investment manager performed relative to an index during periods when that index has dropped. The ratio is calculated by dividing the manager's returns by the returns of the index during the down-market and multiplying that factor by 100.
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It looks like whoever it was at Morningstar has to tell you what index s/he is comparing the fund's performance to. Without that information the ratio, even if calculated correctly, can't be interpreted. It may well have been in the article you remember.
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Last edited by Phineas J. Whoopee on Mon Dec 26, 2016 5:13 pm, edited 1 time in total.

Grt2bOutdoors
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Re: Star Fund Question (VGSTX)

Post by Grt2bOutdoors » Mon Dec 26, 2016 5:04 pm

STAR fund does not invest in either the Balanced Index or Wellington Fund. So that isn't the reason, either.
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Saphomd
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Location: SF, CA

Re: Star Fund Question (VGSTX)

Post by Saphomd » Mon Dec 26, 2016 5:26 pm

Thanks, so what they were saying is the Star fund lost more than the benchmark ( or index) in down periods.

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