By Peter Finch
One frequent knock on individual investors: They're prone to
tampering with their assets. They'd be better off choosing a good
mix of stocks, bonds and cash, and largely leaving it alone,
advisers say.
Yet even a portfolio running on autopilot needs attention every
so often--to keep your allocations on target, for example, or to
see where you might invest a year-end bonus most effectively.
Right now is a good time to consider rebalancing your portfolio,
says Sheryl Garrett, founder of the Garrett Planning Network of
financial advisers. After two strong years in the U.S. stock
market, she points out, you might be 70% in equities and 20% in
fixed income when you thought you were 60% and 40%.
The Web has no shortage of tools to review and analyze your
holdings. We tested several of the newer ones as well as some from
familiar names.
Brokerages and Fund Firms
Are you a client of a discount brokerage or one of the bigger
mutual-fund companies? Chances are you can go to its website right
now and view your account from multiple angles: the percentage of
large stocks in your portfolio versus small stocks, say, or
government bonds versus corporate ones.
Most of these tools will also let you add investments held at
other firms, allowing you to track and study your entire portfolio
in one place--making them much more useful.
Fidelity Investments' Guided Portfolio Summary combines a slick
presentation with strong financial information. Colorful,
interactive pie charts make your overall allocation easy to view
and manipulate. A table on the opening page shows your top
holdings, with Morningstar ratings for funds and analyst ratings
for individual stocks.
Separate boxes reveal your equity and fixed-income styles
("large blend" and "intermediate investment grade," for example).
Dig a little deeper and you'll find a map with your geographic
distribution, your holdings by sector, your portfolio compared with
the overall market, your bonds' credit quality and more.
Vanguard Group's Portfolio Watch has a more pared-down look, but
it's no less helpful. A box on the front page shows the average
return for your allocation since 1926, along with the best and
worst years since then, and the percentage of years with an annual
loss. Click a nearby link and you can see how different allocations
have performed over the same period. The Summary tab is a
plain-English overview of your portfolio, with commentary: Notes of
approval and caution are sprinkled throughout.
As you might expect from a leader in low-fee investments, some
of Vanguard's most interesting info is expense-related. A tab
labeled Costs, Taxes and Manager Risks takes you to a page with
data on how much you are paying for fund management, comparing your
expenses against averages for Vanguard and the industry.
Charles Schwab's Portfolio Checkup is a decent, if not flashy,
tool. It includes some basic Morningstar data, plus the firm's
proprietary Schwab Equity Ratings on stocks in your portfolio.
(Schwab has ratings on roughly 3,000 stocks.) Users who want a
simple overview of their investments should be satisfied, but if
you're expecting an in-depth dive into your holdings, you may be
disappointed.
The Independents
Morningstar Premium subscribers, who pay $200 a year for access
to the fund researcher's reports and commentary, can use a tool
called Portfolio X-Ray. The name is apt. It gets granular, and
fast. (Morningstar also has an Instant X-Ray tool, with limited
features, that is free to nonsubscribers.)
The opening page not only shows your holdings by asset and
sector, it breaks them down by type: Wonder how many "distressed"
stocks you own? Care to see your growth stocks grouped into four
separate categories--slow, classic, aggressive and speculative?
Want to compare all of this against the S&P 500? This is the
place.
Portfolio X-Ray's Fees & Expenses tab shows how much you're
paying fund managers in actual dollars a year, not just
percentages. The Stock Intersection tab ranks the individual equity
holdings across all your funds, so you can see how much you have in
everything from Apple to Thailand's Kasikornbank.
The software company Personal Capital, founded by a former
Intuit and PayPal executive, pitches itself as "your personal
financial dashboard." Enter your investments on its website--or let
it link to your accounts and collect the data automatically--and it
will present an attractive multicolored graphic of your
holdings.
Beyond this, though, Personal Capital's portfolio analysis tool
is comparatively limited. The company offers this free online
service in the hopes that you will let it manage your money, for a
fee. "Our point of view is that we've got [professional advisers]
and we build our own strategies and portfolios for clients," says
Jim Del Favero, the firm's chief product officer.
A better option for do-it-yourself investors may be SigFig. Like
Personal Capital, SigFig Wealth Management is angling to become
your paid investment manager. But even nonpaying users get access
to a lot of good data about their holdings beyond basic asset
allocation.
Among the highlights: a graphic illustration of your portfolio's
riskiness versus the S&P 500, an annual fee breakdown and a box
of "key stats" including your annual return and the price/earnings
ratio of your stock portfolio.
It's worth noting that much of this fund data, at SigFig or any
similar tool, isn't exactly current. Fund holdings are sometimes
three months out of date, or more. But then, if you build a
diverse, low-turnover portfolio and mainly let it run on autopilot,
tracking your funds' daily movements probably needn't be a
priority.
Rick Ferri, founder of the Troy, Mich.-based
investment-management firm Portfolio Solutions, warns against
messing with your portfolio more than once a year. "In reality, you
could rebalance once every three years or every five years and
you'd be fine," he says. "And if you do it too much, there are
costs associated with it, including taxes.
"I think [rebalancing] is a good idea, but it's oversold by a
lot of advisers."
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