Tortoise, Hare To Pace S&P 500

July 9, 2001 ( - The race between growth and value strategies is in the news at Morningstar, with the construction of two new stock portfolios, the Tortoise and the Hare, comprising undervalued stocks with good long-term prospects.

The paper portfolios will debut in the group’s newly revamped monthly newsletter, Morningstar StockInvestor, to be mailed in mid-July and will highlight the group’s approach to investing.

Slow and Steady

Although both portfolio’s will aim to outperform the S&P 500, the value oriented Tortoise portfolio is targeted at conservative equity investors, and maintains exposures to stocks that have lower-than-average valuation ratios.

The Tortoise portfolio comprises the following 12 stocks:

  • Berkshire-Hathaway
  • Black & Decker
  • Humana
  • Interpublic Group
  • Jones Apparel
  • Kemet
  • Kimberly-Clark
  • Liz Claiborne
  • Office Depot
  • Sears
  • Service Corp International
  • Sherwin-Williams

Fast and Furious

The Hare portfolio on the other hand is designed for investors with a higher risk tolerance, holding stocks with stocks with higher-than-average valuation ratios, signifying loftier investor expectations. The 11 stocks held within this portfolio are:

  • Alcide
  • Autodesk
  • Boston Scientific
  • Charles Schwab
  • EMC
  • Knight Trading
  • Nokia
  • Oracle
  • Reuters
  • Sprint
  • Sun Microsystems

Real World

In order to simulate the real-world experience of investors, the portfolios will assume:

  • a $10 brokerage commission per trade,
  • a 28% tax rate on all short-term capital gains,
  • a 20% tax rate on long-term capital gains, and
  • monthly dividends reinvestment.

The investment decisions will be made by:

  • Mark Sellers, editor-in-chief of Morningstar StockInvestor,
  • Pat Dorsey, director of stock analysis,
  • Haywood Kelly, editor of, and
  • Morningstar’s senior stock analysts,

Composition updates and performance data for each portfolio will be published in Morningstar StockInvestor, along with a commentary on the portfolios.