Question: I've noticed that Morningstar.com's Portfolio Manager offers me two options--"Create a Portfolio" or "Create a Watch List." What are the differences and how do I know which one to pick?
Answer: Morningstar.com's Portfolio Manager tool allows investors to input and track holdings in two different ways--by creating a watch list or a transaction portfolio. Below, we will highlight the unique features of both.
What Is a Watch List?
The watch listallows investors to create a list of investments to monitor on anintraday, daily, or longerbasis. (Click here to begin the process.) Watch lists require only that you input securities by name or ticker. (If you don't know the ticker, simply start typing the security's name, and our suggestion box will help you find the right holding.) If you like, you can also input a specific number of shares, purchase price, and commission, but these are not required for a watch list. Indeed, many Morningstar.com members use watch lists to track securities they don't yet own.
Since price movements are updated throughout the day, watch lists provide a quick and easy way to get an at-a-glance view of how the securities are performing on a daily or intraday basis, track performance over time,and readpertinent news on your watch list holdings. You can also use the watch list to test-drive several model portfolios before tinkering with your actual holdings or saved transactionportfolios.
Watch List Key Features
Watch lists can hold up to 100 fund, stock, or ETF holdings, plus20 cash and 20 bond positions for a total of 140 holdings per watch list. (Premium Members can enter up to 200holdings plus40 cash and 40 bondpositions for up to 280 names per portfolio. Note that investors can input up to 25 watch lists in their Portfolio Manager.
Once you create a watch list, several notable Premium features allow you to look under the hood. Our X-Ray tool, for example, allows investors to assess a watch list's asset and sector allocations to see if there's significant overlap in holdings, as well as evaluate its level of diversification. Investors can also use the Asset Allocator tool to calculate the probability of meeting an investment goal based on the watch list portfolio's total value, investment mix, and their savings rate. Premium Members can alsotrackMorningstar's proprietary ratings, Pick/Pan designations,equity fair value estimates, and more for their watch list holdingsby clicking on the "Views" tab and then selecting "Insights" from the dropdown menu.
For more, click the "Tools" tab on the gray toolbar for a dropdown menu of additional features that are available to both free and Premium Members.
Alert Options
Investors also have the ability to receive a combination of intraday or nightly watch list alerts of their choosing. Once you input securities into a new watch list, you'll have the option to choose your watch list monitoring features. By checking the "Watch List Updates" box, youwill receive a daily e-mail update of how your watch list investments performed that day, as well as any related articles. Check off the "Alert" box to receive e-mail alerts for your individual watch list holdings, such as changes in star rating, expense ratio, stock price, or fund manager. To add additional alerts or to change your watch listalert settings, click on the "Alert" tab on the gray toolbar above your watch list and select the watch list option from the dropdown menu.
What Is a Transaction Portfolio?
Whereas a watch list portfolioallows you to track investments that you are interested in, a transaction portfolio is a much more robust tool that gives you the ability to monitor holdings that you already own. Transaction portfolios allow more details to be added to the portfolio, allowing for greater historical tracking and analysis. (Click here for a tutorial video on how to create a new transaction portfolio.)
Key Features
As is the case with watch lists, investors can enter up to 100 fund, stock, orETF holdings, plus20 cash and 20 bond holdings for a total of 140 positions per transaction portfolio. Up to 25 portfolios can be created.
Atransaction portfolio allows investors to access all the features available for watch lists but also gives them the option to key in specific purchase dates and subsequent transactions (buys and sells). As such, transaction portfolio features support the ability to accurately track your historical performance and cost basis. Moreover, Morningstar members who have entered portfolios have the ability to compare total return versus personal return via the "My Performance" tab. (Total return measures the theoretical performance of your holdings for a specified period of time; whereas,personal return accounts for the capital that you added or withdrew from your transaction portfolio throughout the specified time period).
Alert Options and Portfolio Monitor
After you create a new portfolio, you'll be directed to a page where you can opt to receive portfolio updates or alerts for your portfolio holdings. You can receive the sameintraday and nightly alerts that are availablefor watch lists. In addition, Premium Members can receive our Portfolio Monitor report on theirtransaction portfolios. Portfolio Monitor is a monthly PDF report that provides a comprehensive, customized summary of your portfolio, sent automatically to your e-mail inbox. It details your portfolio's top contributors and detractors, offers a breakdown of your current asset allocation (including sectors, regions, and investment styles), andincludes adigest of the latest Morningstaranalyst commentary on your holdings.To learn more about Portfolio Monitor, visit our Tutorial Center, expand "Portfolio Manager," and select "Monitor."
Turn One Into the Other--Or Combine Both
Keep in mind that you can turn your watch list into a portfolio--or vice versa--by clicking on the "Create" tab in Portfolio Manager and choosing the "Convert to Watch List (or Portfolio)" option. Also check out the "Combine" feature within the "Create" tab, which allows you to merge multiple watch lists and portfolios into a newsingle one (the originals are also retained). For more information on the "Combine" feature, read this article by Christine Benz.And click here for answers to additional frequently asked questions regarding Portfolio Manager.
