Morningstar Category Disclosures
Morningstar Category Names are a subset of Category Groups. Investors can find the group name that corresponds with this fund’s category name by using this chart. A general description of the risks typically associated with funds in this group can also be found in the category group risk disclosures statement area of this page.
NOTE: Because these are group-level risk descriptions, it is possible there may be risks particular to this fund not mentioned, or that some risks mentioned may not apply to this particular fund. Baird therefore recommends reviewing the prospectus of any specific fund in order to fully understand the risks, investment objectives, charges and expenses before investing.
|Morningstar Category Name||Category Group|
|Bank Loan||Taxable Bond|
|Commodities Broad Basket||Commodities|
|Commodities Industrial Metals||Commodities|
|Commodities Precious Metlas||Commodities|
|Consumer Cyclical||Sector Equity|
|Consumer Driven||Sector Equity|
|Corporate Bond||Taxable Bond|
|Diversified Emerging Markets||Foreign|
|Emerging Markets Bond||Taxable Bond|
|Energy Limited Partnership||Sector Equity|
|Equity Energy||Sector Equity|
|Equity Precious Metals||Sector Equity|
|Foreign Large Blend||Foreign|
|Foreign Large Growth||Foreign|
|Foreign Large Value||Foreign|
|Foreign Small/Mid Blend||Foreign|
|Foreign Small/Mid Growth||Foreign|
|Foreign Small/Mid Value||Foreign|
|Global Real Estate||Sector Equity|
|High-Yield Bond||Taxable Bond|
|High-Yield Muni||Municipal Bond|
|Inflation-Protected Bond||Taxable Bond|
|Intermediate Government||Taxable Bond|
|Intermediate-Term Bond||Taxable Bond|
|Large Blend||US Equity (Large Cap)|
|Large Growth||US Equity (Large Cap)|
|Large Value||US Equity (Large Cap)|
|Latin America Stock||Foreign|
|Long Government||Taxable Bond|
|Long-Term Bond||Taxable Bond|
|Mid-Cap Blend||US Equity (Mid Cap)|
|Mid-Cap Growth||US Equity (Mid Cap)|
|Mid-Cap Value||US Equity (Mid Cap)|
|Miscellaneous Sector||Sector Equity|
|Multisector Bond||Taxable Bond|
|Muni California Intermediate||Municipal Bond|
|Muni California Long||Municipal Bond|
|Muni Massachusetts||Municipal Bond|
|Muni Minnesota||Municipal Bond|
|Muni National Intermediate||Municipal Bond|
|Muni National Long||Municipal Bond|
|Muni National Short||Municipal Bond|
|Muni New Jersey||Municipal Bond|
|Muni New York Intermediate||Municipal Bond|
|Muni New York Long||Municipal Bond|
|Muni Ohio||Municipal Bond|
|Muni Pennsylvania||Municipal Bond|
|Muni Single State Intermediate||Municipal Bond|
|Muni Single State Long||Municipal Bond|
|Muni Single State Short||Municipal Bond|
|Natural Resources||Sector Equity|
|Nontraditional Bond||Taxable Bond|
|Pacific/Asia ex-Japan Stock||Foreign|
|Preferred Stock||Taxable Bond|
|Real Estate||Sector Equity|
|Short Government||Taxable Bond|
|Short-Term Bond||Taxable Bond|
|Small Blend||US Equity (Small Cap)|
|Small Growth||US Equity (Small Cap)|
|Small Value||US Equity (Small Cap)|
|Stable Value||Taxable Bond|
|Target Date 2000-2010||Allocation|
|Target Date 2011-2015||Allocation|
|Target Date 2016-2020||Allocation|
|Target Date 2021-2025||Allocation|
|Target Date 2026-2030||Allocation|
|Target Date 2031-2035||Allocation|
|Target Date 2036-2040||Allocation|
|Target Date 2041-2045||Allocation|
|Target Date 2046-2050||Allocation|
|Target Date 2051+||Allocation|
|Taxable Money Market||Money Market|
|Tax-Free Money Market||Money Market|
|Ultrashort Bond||Taxable Bond|
|World Bond||Taxable Bond|
Category Group Risk Disclosure Statements
Different methods of asset allocation are associated with varying degrees of risks. Conservative portfolios contain low risk investments but may not earn any value over time. Moderate portfolios have a higher level of risk than conservative portfolios. Aggressive portfolios mainly consist of equities, so their value tends to fluctuate widely.
World allocation, or investing in foreign markets, may be more volatile than investing solely in U.S. markets due to interest-rate, currency, exchange rate, economic, and political risks.
Portfolios utilizing tactical asset allocation are exposed to two primary performance drags: inaccurate forecasts (i.e. bad market calls) and trading costs.
Investments in convertible securities may be subject to increased interest-rate risks, rising in value as interest rates decline and falling in value when interest rates rise, in addition to their market value depending on the performance of the common stock of the issuer. Convertible securities, which are typically unrated or rated lower than other debt obligations, are secondary to debt obligations in order of priority during a liquidation in the event the issuer defaults.
Target-date funds, also known as lifecycle funds, shift their asset allocation to become increasingly conservative as the target retirement year approaches. Still, investment in target- date funds may lose value near, at, or after the target retirement date, and there is no guarantee they will provide adequate income at retirement.
Funds that make alternative investments or employ alternative strategies may seek returns that are designed to have little or no correlation to the securities markets. However, often those strategies perform similarly to the securities markets at time or for extended periods.
Certain alternative investments have unique risks. For example, commodities and futures thereon experience price fluctuations that are often significant and unpredictable and are related to changes in the demand for or supply of commodities, macroeconomic conditions, geopolitical developments, wars and other military events, changes in government policies, prevailing interest rates, weather conditions, disease and famine, changes in production costs, supply chain disruptions, industrial activity affecting utilization of commodities, competitive alternatives for certain commodities, suspensions or disruptions of market trading in commodities and related futures, futures contract price ceilings, regulatory developments affecting futures contracts, and differences between commodity future prices and current or spot prices.
Real estate investments are subject to various risks that affect their values and the income they generate. Real estate investments are affected by changes in the general economy, prevailing interest rates, local economic and market conditions, competition for tenants, declining occupancy rates, oversupply or reduced demand for space where the properties are located, tenant defaults, increased operating, insurance, maintenance and improvement costs. Many costs associated with owning and operating real estate are fixed even when revenues from the properties are declining. Additionally, real estate development activities are subject to various risks, such as excess construction costs, unfavorable financing terms, construction delays and other challenges, issues with the developer, and changing market conditions. Owners and operators of real estate are also exposed to potential liability under environmental, zoning, tax and other laws.
MLPs and other energy stocks are subject to such risks as non-diversification and concentration risk, geopolitical events or developments and macroeconomic conditions, prevailing interest rates, changes in the demand for and supply of oil, gas and other energy-related products, changes in tax laws that affect MLPs, changes in regulations, regulatory fees and regulatory enforcement activity, the impact of environmental laws, increased production and operating costs, the effect on prices from competing energy products, changes in technology and the availability of alternative energy sources, risks of significant regulatory fines and litigation as a result of leaks, spills, explosions and accidents, and uncertainty from an outbreak or escalation of hostilities and acts of terrorism.
Foreign currencies are subject to the risks associated with such currencies and the changes in their values relative to the U.S. dollar. Such risks include volatility in the price relationship between the U.S. dollar and foreign currencies. The value of foreign currencies relative to the U.S. dollar can be affected by many factors, including national debt levels, trade deficits, international trade and foreign policies, changes in trade and balance of payments, governmental fiscal and monetary policies, currency exchange rates and changes in supply and demand that affect those rates, investment and trading activity of mutual funds, hedge funds and currency funds, exchange rate controls and government intervention in currency markets, inflation rates, interest and deposit rates, market expectations about future inflation rates and interest rates, and global and national economic, financial, political, regulatory, judicial, military and geographical events or developments. Prices of currencies of less developed or emerging market nations tend to be more volatile than those of developed countries, given the greater political, regulatory, economic, financial, military and social instability and uncertainty in less developed or emerging market nations.
Investments in commodity-related instruments are subject to the risk that the performance of the overall commodities market declines and that weather, disease, political, tax, and other regulatory developments adversely impact the value of commodities, which may result in a loss of principal and interest. Commodity-linked investments face increased price volatility and liquidity, credit, and issuer risks compared with their underlying measures.
Investments in foreign securities may be subject to increased volatility as the value of these securities can change more rapidly and extremely than can the value of U.S. securities. Foreign securities are subject to increased issuer risk because foreign issuers may not experience the same degree of regulation as U.S. issuers do and are held to different reporting, accounting, and auditing standards. In addition, foreign securities are subject to increased costs because there are generally higher commission rates on transactions, transfer taxes, higher custodial costs, and the potential for foreign tax charges on dividend and interest payments. Many foreign markets are relatively small, and securities issued in less-developed countries face the risks of nationalization, expropriation or confiscatory taxation, and adverse changes in investment or exchange control regulations, including suspension of the ability to transfer currency from a country. Economic, political, social, or diplomatic developments can also negatively impact performance.
Investments in securities from a particular country or region may be subject to the risk of adverse social, political, regulatory, or economic events occurring in that country or region. Country- or region-specific risks also include the risk that adverse securities markets or exchange rates may impact the value of securities from those areas. For example, investing in the China region, including Hong Kong, the People’s Republic of China, and Taiwan, may be subject to greater volatility because of the social, regulatory, and political risks of that region, as well as the Chinese government’s significant level of control over China’s economy and currency. A disruption of relations between China and its neighbors or trading partners could severely impact China’s export-based economy.
Investments in emerging- and frontier-markets securities may be subject to greater market, credit, currency, liquidity, legal, political, and other risks compared with assets invested in developed foreign countries.
Concentrating assets in large-capitalization stocks may subject the portfolio to the risk that those stocks underperform other capitalizations or the market as a whole. Large-cap companies may be unable to respond as quickly as small- and mid-cap companies can to new competitive pressures and may lack the growth potential of those securities. Historically, large-cap companies do not recover as quickly as smaller companies do from market declines.
Concentrating assets in mid-capitalization stocks may subject the portfolio to the risk that those stocks underperform other capitalizations or the market as a whole. Mid-cap companies may be subject to increased liquidity risk compared with large-cap companies and may experience greater price volatility than do those securities because of more-limited product lines or financial resources, among other factors.
An investment in a money market mutual fund is not insured or guaranteed by the FDIC or any other government agency. Although the funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money market fund.
Investments in municipal obligations, leases, and private activity bonds subject to the alternative minimum tax have varying levels of public and private support. The principal and interest payments of general-obligation municipal bonds are secured by the issuer’s full faith and credit and supported by limited or unlimited taxing power. The principal and interest payments of revenue bonds are tied to the revenues of specific projects or other entities. Federal income tax laws may limit the types and volume of bonds qualifying for tax exemption of interest and make any further purchases of tax-exempt securities taxable.
Investments in municipal bonds that finance similar types of projects, including those related to education, health care, housing, transportation, utilities, and industry, may be subject to a greater extent than general obligation municipal bonds to the risks of adverse economic, business, or political developments.
Concentrating assets in a particular industry, sector of the economy, or markets may increase volatility because the investment will be more susceptible to the impact of factors such as the market, the economy, regulations, and other dynamics affecting that industry or sector compared with a more broadly diversified asset allocation
For example, concentrating assets in the financial sector may disproportionately subject the portfolio to the risks of that industry, including loss of value because of economic recession, availability of credit, volatile interest rates, and government regulation.
Risks of concentrating assets in the real estate sector or REITs, include loss of value because of changes in real estate values, interest rates, and taxes, as well as changes in zoning, building, environmental, and other laws, among other factors. Investments in REITs may be subject to increased price volatility and liquidity risk, and shareholders indirectly bear their proportionate share of expenses because of their management fees.
Loss of value because of intense competitive pressures, short product cycles, dependence on intellectual property rights, and legislative or regulatory changes are some of the risks related to concentrating assets in the technology sector.
Concentrating assets in small-capitalization stocks may subject the portfolio to the risk that those stocks underperform other capitalizations or the market as a whole. Smaller, less- seasoned companies may be subject to increased liquidity risk compared with mid- and large- cap companies and may experience greater price volatility than do those securities because of limited product lines, management experience, market share, or financial resources, among other factors
Investments in taxable bonds such as government bonds, long-term and short-term bonds, bank loans, corporate bonds, preferred stock, high-yield bonds, etc. are subject to numerous risks including those relating to reinvestment, inflation, market, selection, timing, and duration.
The risks relating to taxable bonds are specific to the type of security invested in. For example, the values of inflation-protected securities, unlike other fixed-income securities, are not significantly impacted by inflation expectations because their interest rates are adjusted for inflation. Generally, the value of inflation-protected securities will fall when real interest rates rise and rise when real interest rates fall.
Investments in bank loans, also known as senior loans or floating-rate loans, are rated below- investment grade and may be subject to a greater risk of default than are investment-grade loans, reducing the potential for income and potentially leading to impairment of the collateral provided by the borrower. Bank loans pay interest at rates that are periodically reset based on changes in interest rates and may be subject to increased prepayment and liquidity risks.
An investment in a long-term bond is intended to be held for a substantial period of time, and investors should tolerate fluctuations in their investment’s value.
Investments in preferred stocks may be subject to the risks of deferred distribution payments, involuntary redemptions, subordination to debt instruments, a lack of liquidity compared with common stocks, limited voting rights, and sensitivity to interest-rate changes.
Investments in below-investment-grade debt securities and unrated securities of similar credit quality, commonly known as "junk bonds" or "high-yield securities," may be subject to increased interest, credit, and liquidity risks.