I’ve been a Morningstar premium member for about ten years now. They are a great resource to help assist you in your investment decisions. Their ratings system is universally known throughout the investment community. Originally they only reviewed mutual funds, but a few years ago added stocks to their reviews. Personally I look at services like Morningstar as a way to help speed up my research. You should always do your own investment research and not take what anyone says as gospel.
I guess I should disclose my investment strategy. I’m a fundamental/value investor, and maybe one day I’ll discuss why I believe it’s the best way to invest. You will not see me discuss technical indicators on this blog. I think they are akin to reading tealeaves, or seeing animals in the clouds.
Morningstar is the perfect service, if you believe in fundamental/value investing. Their web site will not discuss technical charts – when you should buy or sell. Morningstar is more about proper asset allocation, low fee investments vehicles, and investments that generate consistent returns. I use Morningstar Premium service because:
- The analysis of stocks, mutual funds and ETFs. It gives pros and cons for any investment (they call “Bulls and Bears”)
- The growth of $10k over time
- The yearly annual returns (with dividends included).
- The performance comparative a benchmark category.
- Actionable Analyst Reports (over 2,000 funds, ETFs, and stocks)
- The allocation of mutual fund into specific investment categories and stocks
- If a stock has dividends – the payout amounts over time
- The annual fees to own an ETF or mutual fund. An important aspect often missed. Typically the lower the cost, the better odds to meet or beat the comparative index.
- Their X-Ray tool is second to none and ensures you aren’t over allocated in a specific sector, country or stock.
- Their free and premium screeners. It offers a quick method to narrow your selection of a stock or mutual fund
- The Cost Analyzer is also a great tool to help pick one ETF/mutual fund over another.
Portfolio X-Ray tool
As I discussed in my review of “The Investor’s Manifesto” by William Bernstein, I definitely think asset allocation plays an important part of a successful investment strategy. If you are doing passive investing, too many eggs in one basket can lead to too many broken eggs. The Portfolio X-Ray tool that Morningstar offers is second to none. It goes into great details about your asset allocation that would be very difficult to compile on your own. It will analyze your holdings and expenses, revealing strengths and weaknesses that affect your financial goals.
While a mutual fund’s prospectus will state its allocation in only US based companies, the statement may not be completely true. Morningstar takes a mutual fund’s quarterly SEC reporting of their individual stock ownership and uses it to help determine your asset allocation. So while on a macro level you may have the correct asset allocation, you could be heavily weighted in a particular stock or category unknown to you. This could unknowingly increase your investment risk and decrease returns.
To get started you manually enter your portfolio information. I wish there was a way to link from Mint (see Mint.com review), but it does have an option to import from a Quicken .qif file (see Quicken 2014 review). Doing it manually it’s a tedious process, but well worth it when finished.
Though keep in mind anytime you update your portfolio you must re-import/adjust on Morningstar’s web site. The first time I plugged in our retirement portfolio, I was amazed with the detail it offered and adjusted our portfolio to the goals we had. I found out we were invested too much in a specific country.
They recently updated their iPhone/iPod Touch app. In their version 2.0 they added the ability to sync portfolios from the web site to your iPhone. This feature is a big addition, compared to the previous version. I’ve tested their latest version, and while better than the first, it still lacks the depth of information available via the web site.
The app is free to download, but it doesn’t offer that much additional information available from other free apps like Bloomberg’s and Yahoo’s tech ticker. Personally, if I’m on the go, I’m more interested in news and Yahoo’s Tech Ticker app. Though I can see some value for the jittery investor getting up to the minute valuations of their portfolio.
Morningstar premium membership offers a wealth of information and is a must have for any investor junkie like myself. The annual fee is $199, and is well worth the cost. You’ll quickly recoup the annual fee because you’ll empower yourself to make much better investment decisions. You can test drive their service free for 14-days with no obligation. Morningstar’s service is like getting an investment adviser, without the costly fees. You can also sign-up for their free service, which excludes the premium options.
Rating: 4 out of 5 stars