Morningstar.com is an investment website which provides independent research on areas ranging from mutual funds, ETF’s, stocks, bonds and personal finance. While a great deal of the data is free, people who manage their own portfolios or want a deeper understanding of their current (or future) holdings will likely find value in a premium membership. Below are three of the premium offerings I find most useful (mutual funds are used to depict examples).
Analyst Reports:
I’ve found Morningstar’s analyst reports to generally be helpful, particularly when trying to decide between two mutual funds in the same asset class. The reports cover high-level differences between the fund and its category average, and usually include an explanation of current results and how the fund’s strategy could affect performance moving forward. While the insight is typically worthwhile, it’s not detailed enough to replace investor research. It is however, a valuable resource to determine whether a fund fits your investment style.
Portfolio X-Ray:
The Portfolio X-Ray tool is far and away the best premium feature, allowing the user to understand how the pieces of his/her portfolio truly fit together. For instance, say you want to examine your portfolio, which contains 401k and IRA investments. By inputting the total percentage of each holding, one can see a detailed breakdown of the asset allocation, sector, stock type, top 10 holdings, foreign investment exposure and much more. Furthermore, the stock intersection tool allows the user to see how much exposure their portfolio has to individual companies. If your portfolio contains a large cap growth fund and a large cap blend, both may hold a significant stake in a company such as Coca-Cola, which can increase the portfolio’s overall exposure and volatility to individual companies (or sectors).
Similar Funds Tool:
The similar funds tool is useful for investors trying to decide between funds within a particular asset class. For example, if one wanted to invest in Vanguard International Explorer ($25K minimum) for an IRA, that particular fund would be out of the question due to its $25K fund minimum. However, one could use the criteria they like about that fund to find another with similar characteristics. This is also useful to learn about “competitive” funds within the same asset class to understand how their strategies differ from your fund’s.
While there are more tools premium members can use, such as fund analyst picks, trade analyzer and premium stock picker, I’ve found the three listed above to be the most useful for mutual fund investors. Morningstar allows new users a two-week premium membership free trial and then offers a variety of membership plans, making it easy to find an affordable option. The only complaint I have with the process is that one must call to cancel a membership, which is kind of annoying. Other than that, I think Morningstar’s premium membership is a worthwhile investment, particularly for those who don’t have a financial advisor or institution managing their assets.
