The following is our latest Fund Analyst Report for Emerald Banking and Finance Investor (FFBFX). Morningstar Premium Members have access to full analyst reports such as this for more than 1,000 of the largest and best mutual funds. Not a Premium Member? Gain full access to our analyst reports and advanced tools immediately when you try Morningstar Premium free for 14 days. Emerald Banking & Finance has moved outside its circle of competence. The Morningstar Analyst Ratings on its cheapest share class falls to Neutral from Bronze. More expensive shares remain rated Neutral. Longtime managers Ken Mertz and Steven Russell have historically focused on regional banks, which accounted for 70%-80% of portfolio assets. They used a sensible and structured approach to finding the best ones, relying on extensive interviews with management teams and valuation models estimating future cash flows, earnings, target prices, and downside risks. However, a big shift into cryptocurrencies in late 2020 and early 2021 calls the discipline of the approach into question. As of February 2021, regional banks account for just 33% of asserts--the lowest ever in the strategy’s 23-year history--while cryptocurrencies and businesses exposed to them make up 23% of the portfolio. Several such holdings are tied directly to the price of these digital currencies--such as Grayscale Bitcoin Trust, Grayscale Ethereum Trust, Purpose Bitcoin ETF, Bitcoin ETF, and Bitwise 10 Crypto Index--which together account for 4.7% of the portfolio. These assets have no management teams or cash flows to assess, so such a large stake seems speculative rather than a diversifying extension of the existing process.