|Course 110: Avoiding Overlap When Building a Portfolio|
|Using Morningstar.com's Portfolio X-Ray|
Here's what you need to do to X-ray your portfolio for stock overlap on Morningstar.com. (Feel free to print out this class and hold on to these directions for future reference.)
1. Sign up for Morningstar.com's Premium Membership.
2. Click on Morningstar.com's Portfolio Manager.
3. Click on Create New Portfolio.
4. Name Your Portfolio.
5. Choose either a Watch List or a Transaction Portfolio. A Transaction Portfolio is far more precise than a Watch List Portfolio, and is the better choice overall, because it allows you to more effectively monitor your actual purchases over time.
6. For each of your funds and stocks, enter the ticker and the amount of money you have invested.
7. Click the Save Portfolio button at the bottom of the page.
Now it's time to X-ray. Click on the X-Ray tab and then click the Stock Intersection button. (The other buttons, X-Ray Details and X-Ray Interpreter, are different ways to examine how your portfolio fits together.)
The program examines each fund's top 50 holdings (a fund's 51st and succeeding holdings aren't likely to be significant stakes) and weights them according to how much you have invested in each fund.
So what did you find? Higher weightings in certain stocks than you wanted?
Remember, outsized positions—say, those that account for 5% or more of your total assets—can add return potential to your portfolio, but they can also contribute outsized volatility.
Next: The Quiz >>
|Learn how to invest like a pro with Morningstar’s Investment Workbooks (John Wiley & Sons, 2004, 2005), available at online bookstores.|
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