Comparison: On-Line Portfolio Managers

While mutual fund investors can get by with monitoring their portfolios on a quarterly basis, investors with a portfolio of individual stocks must constantly monitor portfolio movements. Web-based portfolio managers, also referred to as on-line portfolio trackers, can provide a means to easily record transactions and track performance.

Portfolio data updates, links to news stories and portfolio event-driven E-mail alerts are some of the standard offerings at these sites. Some sites also offer additional tools such as asset allocation, diversification and risk analysis. Most on-line portfolio management applications are part of a more comprehensive investment-related Web site (which will be the topic of the upcoming comparison in the September/October 2006 issue of Computerized Investing). While many of these sites are free after registration, some charge reasonable subscription fees for advanced functions.

Although many of the Internet-based portfolio management services offer adequate tools for monitoring a stock portfolio, on-line monitoring tools do not offer the same capabilities as the top portfolio management software programs. They are best used as tools for keeping up with the frequent happenings in your portfolios and receiving notification of current events that might affect your investment holdings. While many of the Web sites have made improvements since our last comparison in the July/August 2004 issue, GainsKeeper continues to be the only site that provides a complete system that tracks all of the transactions in your portfolio to compute the capital gains for tax reporting purposes.

An on-line manager is like a personal assistant, helping to monitor the activity of your portfolio. On-line portfolio managers do not profess to do what software can do. They can track a portfolio effectively, but they do not generate reports or calculate returns to the extent that software does. However, they are clearly heading in that direction.

On the other hand, alerts and easy access to timely data make on-line portfolio managers a valuable component to any investor’s overall portfolio tracking.

Not Suited for Everyone

It is worth mentioning, however, that on-line portfolio systems are not for everyone. The sophisticated investor who trades securities beyond stocks and mutual funds—options, bonds, commodities or futures—will not be able to monitor all of his holdings through these sites. The majority of the applications discussed in this comparison target the typical individual investor who needs basic portfolio monitoring tools and whose holdings are comprised primarily of stocks and mutual funds.

The Checklist

To make sure you find the right portfolio monitoring tool to suit your needs, it is always a good idea to create a checklist of specific features you are looking for. These features can include:

• frequency of updates,
• automatic refreshing of display,
• desktop software compatibility,
• links to brokerages,
• links to newswire services,
• E-mail alerts,
• access to additional analysis tools,
• number of portfolios that can be tracked,
• number of securities that can be tracked per portfolio, and
• type of securities handled.

Updating

One of the most important elements of the checklist is the frequency of the data updates and whether a portfolio display is updated automatically or manually by the user. Tracking, maintenance and refreshing of holdings are the key functions desired by all investors.

Each Web site, at a minimum, offers quotes delayed by 15 to 20 minutes. Some sites require you to manually click the Refresh button on your Web browser in order to update the pricing data. Others will refresh automatically, allowing for one less element to think about. Some sites establish a static refresh timeframe that cannot be changed, while others, such as MSN Money, allow users to adjust the length of time between each automatic refresh.

Brokerage Links

A great feature offered by three of the sites in the comparison is the ability to link directly to a brokerage firm and place trades. GainsKeeper, Kiplinger and MSN Money all offer links to multiple brokerages.

Compatibility

Another welcome feature available with some on-line portfolio managers is the ability to import and export data. A handful of the Web sites—including Morningstar and SmartMoney—allow you to import data from software programs such as Quicken and Microsoft Money, while others allow you to import portfolios from other financial Web sites. Most allow you to export the portfolios to an Excel file. GainsKeeper allows you to import transactions directly from a brokerage account. This function can be a huge time-saver since you don’t have to enter every new transaction by hand.

Additionally, the ability of an on-line portfolio management system to automatically adjust for stock splits and dividends and to track the reinvestment of dividends is a great time-saving feature.

Newswire Services

On-line portfolio managers offer direct links to newswire stories and news headlines on the companies you currently track in your portfolios. These news stories are often located right on the portfolio’s current holdings or transactions view as well as within a separate display dedicated just to news stories, headlines, and press releases.

Newswire services range from the standard set (AP, Business Wire, PR Newswire) that can be found almost anywhere on the Web to a higher tier of limited-access newswires and news resources (Dow Jones, Reuters) and unique news outlets such as TheStreet.com. In most instances, links are provided to complete news articles, while other times merely news headlines are given.

News links are a basic feature offered by most sites reviewed here. The depth and breadth of coverage is what can set some sites apart from others, as well as access to any subscription-based market news, such as those stories and reports from The New York Times, TheStreet.com or the Wall Street Journal Online.

E-Mail Alerts

The most significant feature that differentiates an on-line portfolio manager from a software program is its E-mail notification capabilities. An E-mail alert can warn you of possible danger to your portfolio (a stock falling below a price target) or merely notify you of general activity (a stock split). Alerts can also convey something as simple as a dividend being declared for one of the stocks that you own.

E-mail alerts are not junk mail and they do not clog up your inbox with unnecessary messages. They are set up by you and notify you of important events in your portfolios. Some alerts allow you to choose to receive only certain types of news on specified securities. MarketWatch offers a unique feature that allows you to get one E-mail notification that consolidates all of the day’s activities.

Additional Analysis Tools

Another perk of on-line portfolio management systems is access to an abundance of additional tools for further research and analysis. For example, stock and mutual fund screening services are great tools for finding and researching prospective investments. Assessing the quality of these tools is an important part of evaluating a portfolio tracker.

The most popular tools include stock and mutual fund screening modules and interactive technical charting applications. With screening modules, be sure to check out the universe supported (i.e., the number of funds or stocks in the database) as well as the number of data fields available for screening—two key factors that help differentiate these tools. The availability of technical indicators and user-defined timeframes is important to consider when you compare a site’s interactive charting tools. Other useful features include fundamental data, earnings estimates, company and fund reports, market statistics and any financial calculators.

Access to such tools is quite variable, but the functions are offered in some capacity by all the sites reviewed here and the depth of data and degree of functionality of the modules are what set some sites apart from others.

Number of Portfolios

The number of portfolios that can be tracked at these sites also varies and might prove to be an initial criterion that quickly narrows your choices. For the sites in this comparison, that number ranges from 25 portfolios to an unlimited number of portfolios. Also important is the number of securities you can add to each portfolio. A nice feature is the ability to view multiple portfolios at once for easy performance comparison.

Most of these on-line portfolio management systems allow you to track a portfolio of stocks or mutual funds that you do not own but would like to keep an eye on. Referred to as a “watchlist,” the data is entered differently for this type of portfolio. Also, the monitoring measures are set up a little differently for watchlists, so you can judge whether these securities would make good investments.

Securities Handled

The types of securities that can be tracked by the portfolio manager module is key to making a decision on which portfolio manager is right for you. Most investors will find the types of securities handled by the sites adequate but the sophisticated investor who invests in more complex securities may need a more sophisticated software program. The majority of these on-line portfolio managers allow for tracking only cash, stocks, and mutual funds.

Only a few services track other investment instruments. The specific coverage of securities is noted for each Web site in the descriptions that follow. Most allow users to track a cash balance, and most can include major indexes for comparison and monitoring purposes. Each site allows you to get quotes on any stock or mutual fund included in their particular database.

Web-Based Versus Software

The on-line portfolio trackers in this comparison were surveyed using the same criteria as used in our portfolio management software comparison in the July/August 2005 issue of Computerized Investing. This includes securities handled, security classification and various reporting standards. This gives you an “apples to apples” comparison of both on-line and software-based portfolio management systems.

Business Week Online

Figure 1. Business Week Online CLICK ON IMAGE TO SEE FULL SIZE.

BusinessWeek Online provides users with free access to BusinessWeek news stories and data as well as Standard & Poor’s (S&P) reports. You can create up to 25 different portfolios with up to 150 mutual funds or stocks in each. Cash values can also be tracked. While the site’s portfolio management offerings are basic, investors with small, uncomplicated portfolios will find it adequate.

You can create a new portfolio or add to a current portfolio by entering a ticker symbol and purchase information. Management fees for mutual funds can only be accounted for by manually adjusting the share price for these additional costs.

The portfolio summary page shows a list of your portfolio’s current holdings, with each security’s current price and value, purchase information, and change in daily and total value. Current security prices are updated by manually refreshing the page.

The site also offers a valuation analysis that rates each security as undervalued or overvalued. A list of the stock’s vital statistics—such as price-earnings ratios, price-to-sales ratios and growth rates—is available for easy comparison. You can click a ticker symbol and get more detailed information about an individual security including financial statements, estimates, and interactive charting tools.

E-mail alerts notify you of price movements and portfolio news. Access to this site is free.

GainsKeeper

In addition to portfolio tracking, GainsKeeper provides tax evaluation—unique among these sites. You can keep track of stocks, mutual funds, bonds, options and cash. GainsKeeper allows you to import transactions via your brokerage Web site, Excel, Microsoft Money, and Quicken, or to manually enter transactions. You can create an unlimited number of portfolios. The site offers a step-by-step getting-started guide to assist with creating new portfolios and adding transactions.

Figure 2. Gainskeeper CLICK ON IMAGE TO SEE FULL SIZE.

The program will make automatic adjustments for many corporate actions including stock splits, mergers, dividends and name changes. You can view the current value of your holdings as well as the year-end value of your portfolio for the past seven years.

Interactive portfolio evaluation tools allow you to view your current diversification by asset type and industry concentration. You can also set a desired diversification target and see how your portfolio measures up. Various charts and graphs visually detail your portfolio holdings and diversification.

The “What If Tool” allows you to see how adding various securities will affect your portfolio and taxes. Advice for minimizing taxes and an analysis of which lots should be sold first at year-end are both useful tools. You can also use GainsKeeper to keep track of wash sales for tax purposes. As mentioned earlier, GainsKeeper offers links to over 30 different brokerage firms for instant trading.

A free 30-day fully functioning demo of the program is available on the Web site. For $49 per year, you can enter up to 100 transactions annually; up to 1,000 transactions per year can be entered for $149. If your yearly trading level exceeds 1,000 trades, you can purchase additional “Trade Buckets” at any time.

GainsKeeper is the only site that offers thorough tax preparation and evaluation services. For investors with more complex trades and securities who want help making tax decisions, GainsKeeper could be a good fit.

Kiplinger.com

Kiplinger Magazine offers security analysis tools, editorial content and portfolio management tools for free. The site’s portfolio tracking system is more advanced than some, but is still lacking in sophistication. For example, there is only a limited ability to customize views and charts. You can create a watchlist and easily add stocks from the watchlist to your actual portfolio. Stocks, mutual funds and options can be recorded and tracked. The site keeps track of a security’s purchase price, commissions, current market value and other important data. An end-of-day E-mail alert summarizes the current market value of your portfolio and any news regarding the securities in the portfolio. You also have the ability to restrict news received to certain securities.

Figure 3. Kiplinger.com CLICK ON IMAGE TO SEE FULL SIZE.

Entering new transactions and creating new portfolios is simple and straightforward. Investments can be tracked in U.S. dollars as well as Canadian dollars. Stock splits are automatically accounted for and the site offers the option of tracking dividend reinvestments, which will show up on the transactions list after they occur.

Links to over 30 different brokerage firms allow for quick and easy trading. You can track an unlimited number of portfolios with up to 100 securities in each. Simple pie charts and bar graphs illustrate your portfolio’s weighting by sector, country and market capitalization.

MarketWatch

MarketWatch is a great place to find a wealth of news stories from various sources on any security. All registered users have access to free market data and investing tools. Stock and mutual fund screening as well as interactive charting make this site a good comprehensive investing site. MarketWatch’s portfolio tracking tool allows an unlimited number of portfolios to be created with up to 200 stocks, mutual funds, or options in each.

Price target and security news alerts can be received via E-mail. A convenient feature is the ability to receive news for the entire portfolio only once per day, which helps to reduce the number of E-mails sent to your account.

Figure 4. MarketWatch CLICK ON IMAGE TO SEE FULL SIZE.

Price and volume data is updated automatically in real-time. You can create custom views by choosing from a list of about 25 criteria. You can rank the securities based on any of the criteria in either ascending or descending order.

Entering a new transaction requires the purchase price, date of purchase, commissions and fees, and the number of shares. A narrow pop-up window shows the current quotes and links to current news stories for the portfolio.

An allocation chart provides a visual representation of the portfolio’s breakdown by security, industry, and asset class.

While MarketWatch is better known for its vast news offerings, the portfolio tracker is sufficient for monitoring price movements and general portfolio performance.

Morningstar.com

Morningstar.com offers market news, stock and fund screening, portfolio tracking and security analysis. Much of the content is available for free, while the premium services—including more in-depth portfolio tracking and stock and fund screening—cost $14.95 per month.

The premium service allows for 50 portfolios with the ability to add up to 100 stocks and mutual funds, 20 bonds and 20 cash positions in each portfolio. Morningstar.com offers a wide range of E-mail alerts including price movements, news, portfolio performance, and relevant changes in an investment—such as a stock split, dividend, change in earnings estimates or changes in a mutual fund’s management style or expense ratio.

You can import portfolios from Microsoft Money, Excel, Quicken and various Web sites including MSN Money and Yahoo! Finance.

Figure 5. Morningstar CLICK ON IMAGE TO SEE FULL SIZE.

Custom views and reports can be created by choosing from a list of over 75 data points that include performance, risk, and fundamental criteria. You can add 35 criteria to each custom view. The X-Ray feature allows for an in-depth analysis of your portfolios. It breaks down each portfolio by sector, style, security type, and region. You can also view a list of mutual fund fees and expenses and the top 10 holdings in your portfolio. The site offers an X-Ray interpreter, which gives a detailed description of your portfolio’s asset allocation, performance, and diversification. You can also see if you have any overlapping stocks in mutual funds with the Stock Intersection analyzer. Another valuable tool is the risk analyzer, which evaluates how the securities in your portfolio interact and measures the overall risk of your portfolio.

Data on individual securities is broad and deep. Fundamental, technical, and historical data are compared to benchmarks and to the market as a whole, while interactive charts provide a visual representation of important stock data.

Morningstar.com offers the most additional analysis tools of any site in this comparison and the portfolio tracker is easy to use. Price and volume data, however, must be refreshed manually.

MSN Money

Microsoft and MSN team up to offer highly sophisticated portfolio management tools for free to registered users. To register, you must give an E-mail address. Because MSN Money is sponsored by Microsoft and because of the relationship between Internet Explorer and the software company, using a different browser—such as Mozilla Firefox—limits the capabilities of the site.

When using Internet Explorer, you need to download ActiveX and the MSN Toolbox in order to use the portfolio management tools fully, but they are quick and easy to install. The installation provides a true portfolio management module with full customization and printing capabilities. However, the presentation of the portfolio module is quite different on a Macintosh machine: Gone is the ActiveX application and in its place is a standard html-based Web page. Portfolio creation, editing and analysis are much slower in the less sophisticated step-by-step process.

Figure 6. MSN Money CLICK ON IMAGE TO SEE FULL SIZE.

If you are accessing the site via Internet Explorer, you can see updated price and volume data on your securities every five minutes. If you are using the Mozilla browser, you must refresh the page manually to see changes in price. Both browsers allow you to customize portfolio views; however, the choices with Mozilla are more limited. With Internet Explorer you can choose from around 70 different criteria and add as many as desired, while you have just over 30 criteria choices and 12 columns when using Mozilla. Criteria range from basic (current price, purchase price, and total return) to advanced (exchange rates and various valuation ratios).

Both browsers walk you step-by-step through entering a new transaction or creating a new portfolio. You can keep track of commissions with both browsers and find a security’s price on a specific date with Internet Explorer. You can track cash, stocks, options, mutual funds and indexes with either browser. You can create 50 portfolios with up to 100 securities in each.

News and price target alerts can be set up when using Internet Explorer and are sent via E-mail or MSN Messenger (Microsoft’s version of instant messenger). Additionally, MSN Money offers a “Trade Now” feature that allows users to trade securities via five different brokers including Scottrade and Ameritrade. You can also view your portfolio at various points in time. For example, you can see how your portfolio looked six months ago. All data can be exported to Excel.

Reports can be generated based on investment style, asset class and individual securities and you can produce a combined performance report for multiple portfolios. MSN Money also offers links to news stories from basic sources including Forbes, AP, Business Wire and TheStreet.com.

By clicking on a ticker symbol, you can view in-depth security information including financial statement data, ratios, news, and current quote data. The site’s interactive charting is also a great tool for security analysis. Again, however, your browser must be able to support ActiveX to get the full experience. MSN Money’s portfolio management suite is clearly meant to be used with Internet Explorer on a Windows-based system, but for those with alternative Web browsers, it offers a sufficient set of tools for basic management and analysis in an easy-to-use format.

SmartMoney.com

SmartMoney Magazine offers a fairly comprehensive investing Web site with most data available at no cost. SmartMoney Select offers more sophisticated tools for stock and mutual fund screening as well as individual security analysis for $19.95 a month. In addition to access to the Smart Money magazine archive, you can link to stories from Barron’s Online and Dow Jones Newswire. The site offers two portfolio trackers—one in html format and a more enhanced tool that is Java based.

A great feature offered by this portfolio tracker is the ability to retrieve a security’s closing price for a specified day. For example, if you bought a stock on October 25, 2003, and don’t have a record of the per share price, SmartMoney will find the end-of-day price. You can also import portfolio transactions from Quicken and Microsoft Money; SmartMoney Select subscribers can export securities to the site’s Stock and Fund Compare tools.

Figure 7. SmartMoney CLICK ON IMAGE TO SEE FULL SIZE.

E-mail alerts are available when a security hits a specified price target. If you are a real-time subscriber ($10.95 to $19.95 per month), SmartMoney guarantees you will receive the E-mail within three minutes of the price movement. Non-real-time subscribers will receive the E-mail within 23 minutes.

You can create 50 portfolios with up to 50 mutual funds, stocks or options in each. Views are customizable, and you can see transaction data for your portfolio over various time periods. SmartMoney’s Portfolio Tracker can also graphically analyze your portfolio’s holdings, performance, and diversification with one of its many Java-enhanced tools. Overall, SmartMoney offers a nice set of free tools for portfolio monitoring and offers more sophisticated tools including real-time data for a minimal cost.

Yahoo! Finance

Yahoo! Finance is one of the most popular investing Web sites. In addition to news from various sources (including RealMoney, TheStreet.com and the Wall Street Journal), individual stock and mutual fund quotes, a stock and fund screener, interactive charts, and financial tools, Yahoo! Finance offers a basic portfolio manager. You can create an unlimited number of portfolios with up to 200 stocks and mutual funds in each.

Figure 8. Yahoo! Finance CLICK ON IMAGE TO SEE FULL SIZE.

Customizable views can be created with 16 columns of data. There are over 50 criteria to choose from including performance numbers, price and volume data, fundamental data, consensus earnings estimates, and technical indicators.

Users can opt to receive an end-of-day E-mail with portfolio performance and market news. Portfolio data can be downloaded to an Excel spreadsheet file and to Quicken. Watchlists can be created. Pricing data, however, must be refreshed manually.

Yahoo! Finance also offers a wide array of data on individual securities including yearly and quarterly fundamental data, ratios, earnings estimates, analyst reports, SEC filings, historical prices and interactive charts.

Cara Scatizzi is associate financial analyst at AAII.