request for input: little-known, cool features at Morningstar

David_Snowball

Dear friends,

As you probably know, we're going to start a new feature which highlights websites that are really worth your time (with red flags on a few that aren't). One of the problems is that sites are sometimes so rich, or so poorly designed, that you never find the best parts. Rather than just describing a site, we thought we'd try to ID the stuff that you might miss.

We'll profile ten fund rating sites in March. Three of the profiles will be in-depth, the rest will be capsules of second- (third- or fourth-) tier sites. Of necessity, we'll talk about Morningstar. Here's where Junior and I could use your reactions. We actually asked Morningstar's web folks whether there were features that they thought were particularly cool but underused. After a couple days of discussion, they offered up five possibilities. Independently, Ira Artman ~ a really good financial services professional who's been around a long time ~ offered up a sixth.

So here's the question: which of these strike you as things that you think folks should check out?

Taxes visualized, Ira's find: http://etfs.morningstar.com/distribution?t=vig This feature visualizes the composition of a fund's or ETF's taxable distributions. It's not available on a fund's page, but if you change the ticker symbol at the end you get any fund's results.

These other suggestions were forwarded by Shawn Malayter, who works in corporate communications for The Wizards on Wacker. He talked with some of the "product team" folks and came up with these four. (In fairness to Shawn, he also offered a link to corporate credit ratings but that seemed a bit far afield.)

The Market Valuation Graph which allows you to dial in different sectors, moat bands, etc.: http://www.morningstar.com/market-valuation/market-fair-value-graph.aspx You can pick individual sectors or business characteristics ("wide moat," for example) and see by how much the stocks in that group are trading to a discount or premium to Morningstar's calculation of "fair value." They do have decent research on the validity of their valuation estimates. If you're feeling contrarian, check sectors->financial->global banks or capital markets.

ETF Valuation Quickrank is available to subscribers only. It gives a quick overview of the market sectors our analysts think are cheap or expensive: http://quicktake.morningstar.com/etfnet/quickrank.aspx This is an extension of the stock valuation stuff, above. They're screening for ETFs which contain a lot of stocks trading at a substantial discount to fair value, then calculating whether the ETF is likely to outperform the market going forward (assuming a regression to the mean of the stocks' values - deeply undervalued stocks will drift toward fair value giving them a gain over other stocks in their sectors). Quick heads up: REITs, not such a swift play right now. Cloud computing likewise.

Target date portfolio data for fund families, which allows you to see asset allocations for specific retirement dates: http://portfolios.morningstar.com/fund/summary?t=VTTVX&region=USA&culture=en-US Check out the top of this page for either fund's asset allocation compared to its peers, then check the bottom to see the "glide path" the fund will follow as it matures.

our guide to creating an investment policy statement, something every investor should have (including a link to a worksheet to help create your own statement): http://news.morningstar.com/articlenet/article.aspx?id=309575 This strikes me as a sort of "financial planner in a box" page where they list the eight or nine steps to creating your own financial plan. The value is derived from the persuasion literature that shows that once you write something down, you're more likely to stick with it.

In any case, those are the features that we could imagine highlighting. We'll probably pick three, for the sake of brevity. If you get a chance, click around and let us (Junior, the community, me) know whether any of them call to you.

Thanks for all you do!

David

p.s., if you haven't followed Accipiter's thread of great non-investing reads, you should. I'm always astounded and humbled by the range of your interests. The inestimable Chip has posted a list of, and links to, all of the books at our Amazon store. Resources->books->great non-investing reads. (ds)

Accipiter

FYI: This link appears to be available to premium members only.

ETF Valuation Quickrank which gives a quick overview of the market sectors our analysts think are cheap or expensive: http://quicktake.morningstar.com/etfnet/quickrank.aspx This is an extension of the stock valuation stuff, above. They're screening for ETFs which contain a lot of stocks trading at a substantial discount to fair value, then calculating whether the ETF is likely to outperform the market going forward (assuming a regression to the mean of the stocks' values - deeply undervalued stocks will drift toward fair value giving them a gain over other stocks in their sectors). Quick heads up: REITs, not such a swift play right now. Cloud computing likewise.

Derf

David, I think link #3 is off .
Derf

David_Snowball

Reply to @Derf: Thanks, Derf. Flagged it as "premium only."

David_Snowball

Reply to @Accipiter: Thanks, big guy! Flagged it and will probably drop it from the final profile unless folks think there are enough paying customers to warrant inclusion.

msf

Reply to @David_Snowball: TRowePrice enables one to be a M* premium member without being a paying customer. True, you have to be a TRP "Preferred" client ($100K+). Still, this is a "back door".

http://individual.troweprice.com/public/Retail/Products-&-Services/Select-Client-Services/Preferred-Services
(expand online services on that page)

David_Snowball

Reply to @msf: Yep. By happy coincidence, T. Rowe Price prefers keeping my (mostly retirement) portfolio and so I enjoy this particular perk.

Investor

If you have entered a portfolio at M* as a free user and want to do a quick Portfolio x-ray (which is available for paid users), you can still do an x-ray like evaluation of your asset allocation and sector allocation via Portfolio Allocator.

http://portfolio.morningstar.com/Rtport/Reg/PortAllocDisclaim.aspx?dt=14

After acknowledging T&C, the next screen show your asset allocation. You do not need to continue after that.

David_Snowball

Reply to @Investor: Hadn't thought of it in those terms. Thanks.

Mostly I think of the Portfolio Allocator as Morningstar's single worst feature since it won't give you a recommendation unless you enter a value in every box. That is, you need to express a preference about the target allocation to "basic materials," to "small value" and to everything else before it will generate an output. It's utterly maddening. David

[Deleted User]

A quick look at this post seems to be about *M features. One improvement and explanation is tax efficiency. How can it be helpful? If it is using highest tax bracket, those in retirement and 15% tax bracket do not get the data they need. Total return is more useful, not just return after a 30% etc tax hit in 10 years. Needs lots more and better analysis.