The asset-weighted average of the potential capital gains exposure or expense ratio of the holdings in the portfolio. The sum of the potential capital gains exposure or expense ratio of each holding multiplied by the weight (%) each holding takes up in the portfolio equals the average potential capital gains exposure or expense ratio of the portfolio.
Potential Capital Gains Exposure
Morningstar calculates potential capital gains exposure to give investors an idea of the potential tax consequences of their investments. One cannot predict what a holding's taxable distributions will be, but we can offer some clues about worst-case possibilities based on a holding's liquidation liability. The figure shown reflects what percentage of the portfolio’s assets would be subject to capital-gains taxation if the fund were to liquidate today. Where a negative number appears, the holding has reported losses on its books. This information (realized and unrealized appreciation and net assets) is taken from the fund’s annual report.
Average Expense Ratio
The average expense ratio for all funds in a portfolio. Each holding's expense ratio is weighted based on the percent of assets it represents in the portfolio. The weighted average is adjusted upward for holding's that are missing expense ratios.