Web Sites for Optimizing Your Portfolio

    Web Sites For Optimizing Your Portfolio Splash image

    Modern portfolio theory (MPT) introduced the concept of portfolio “efficiency,” which focuses on the portfolio as a whole and how the individual holdings interrelate. An efficient portfolio is more than just the sum of the individual holdings. Through proper diversification, risky assets can be combined in a portfolio to achieve higher returns without taking on additional risk, or to reduce risk in a portfolio without reducing return. The key is selecting portfolio components that work together in combination to achieve this. And to help in this analysis, “portfolio optimizers” were born. Portfolio optimizers are basically asset allocation models that help you select the right combination of investment vehicles that will maximize your return while minimizing your risk.

    Where on the Web can you go to find these tools? Listed below are several current sources for asset allocation advice found on the Web—some are free and others charge a fee.



    FinPortfolio.com’s financial planning, or FinPlan, module is designed to help users chart their financial future. Once you have established your goals and provided your personal information, FinPlan will propose an Optimal Portfolio—showing you how to allocate and rebalance your assets to achieve optimal portfolio performance—based upon your target risk/return profile. You can also use FinPortfolio’s asset selection tool to screen for stocks or mutual funds and create a portfolio that the site will then analyze to derive the optimal weightings of each of the selected investments.

    Cost: Basic service is free; users can track up to 50 stocks or funds in one portfolio and perform analysis on up to five stocks or funds. The premium service is $100 per quarter; users can track up to 100 stocks or funds per portfolio in up to five portfolios and perform analysis on up to 30 stocks or funds.

    Financial Engines


    The Financial Engines Web site was founded by Nobel Laureate William Sharpe. Based on the information you provide, Financial Engines presents a forecast of the estimated future value of your portfolio and whether you are on track to reach your retirement goals. Based on this forecast, your current portfolio, and your goals, the service helps you choose appropriate levels of risk, savings, and investments to create a personalized financial strategy. To put this strategy to work, the Financial Engines service develops an Advice Action Kit.

    Cost: The multiple account advice service is $39.95/quarter or $149.95/year for advice on tax-deferred accounts; the total portfolio advice service is $300/year and includes taxable accounts.

    The service is offered for free to current Vanguard clients with $100,000 or more in assets.



    The analysis provided at the RiskGrades Web site is the RiskGrade measure, a standardized measure of volatility of an asset relative to a “basket” of global equities. The Web site can measure the RiskGrade of individual assets and also calculate RiskGrade values for a group of assets held as a portfolio. Using “What If” analysis, you can see how potential changes in your investments will influence your portfolio. By adding, deleting, or adjusting your holdings, the “What If” analysis allows you to view the impact of the change(s) on your portfolio’s risk profile.

    Cost: The RiskGrade Web site is free to registered users.



    The ValuEngine Portfolio Advisor primarily focuses on portfolios of individual stocks. The Portfolio Advisor uses forecasting models to estimate future returns for the individual stocks in your portfolio and identifies the most favorable stock allocation for your portfolio based on your specified investment objective. The Portfolio Advisor will inform you of the exact number of shares to buy or sell of each stock, depending on your chosen goal.

    Cost: Portfolio Advisor (premium service) costs $24.95 per month.