Welcome to this week’s email for A+ Investor subscribers.
A+ Investor was developed to help investors discover investment ideas, analyze and evaluate those ideas and track their investment holdings or watchlists. One problem we all face today is the constant flow of investment information. Unfortunately, much of it is noise and not news and only serves to make us feel overwhelmed.
The Portfolio Insights tool that is part of A+ Investor is being developed to keep you in the know about your portfolio holdings and watchlists with useful and relevant information. This insights section offers a snapshot of a given portfolio and highlights specific stocks, mutual funds and exchange-traded funds (ETFs) in that portfolio.
In order to unlock the Portfolio Insights, you need to create a portfolio of your current holdings and/or a watchlist of stocks, funds or ETFs that you follow but don’t currently own. This Making the Grade email covers how to go about creating a portfolio using the My Portfolio tool: Building a Portfolio.
In order to see the Insights for a portfolio you created, you first must select the portfolio from the drop-down on the My Portfolio page, to the left of the Create link. Once you have selected one of your portfolios and it loads, click the Insights tab at the far right of the My Portfolio window. This will load the Insights for the selected portfolio:
At the top of the Insights tab is “My Portfolio at a Glance,” which provides some summary statistics for the holdings in the selected portfolio. In this example, there are 20 securities—stocks, mutual funds and/or ETFs—in the selected portfolio. In addition, five of those 20 securities are stocks that pass at least one of AAII’s stock screens as of the close of the last full trading day. The stock holdings in the selected portfolio have 16 individual A+ Ratings of B or better. Lastly, five of the funds or ETFs in the portfolio have special insights. All of the respective information highlighted in the “at a glance” section is provided farther down the page.
The Stock Insights area of the Insights tab lists those stocks in the selected portfolio that meet the criteria of any of the 60 AAII stock screens. This feature allows you to identify additional stocks with characteristics similar to those you already own or are tracking. From this list, you can click on a company ticker to view its Stock Evaluator analysis page as well as click on the link of the individual screening strategies to learn more about the underlying approach and see all of the companies currently passing that screen.
To see how any mutual fund or ETF you hold in a selected portfolio stacks up against funds in the same category, we have created a number of ETF Insights and Mutual Fund Insights that appear at the bottom of the Insights page.
If you prefer ETFs that are less volatile than their peers in the same category, there is an ETF insight that will highlight the ETFs that you hold. In this example, one of the five ETFs in the selected portfolio—Vanguard Health Care ETF (VHT)—is less volatile than the typical ETF in the health category.
Among the six mutual funds that are in this portfolio, two have exhibited strong performance relative to their category for multiple periods: Vanguard Small Cap Value Index Admiral (VSIAX) and Vanguard 500 Index Investor (VFINX). In the case of VFINX, it has outperformed the large blend category by at least 100 basis points (one percentage point) in seven of the last 10 years (this data is available in the Evaluator reports that are available for all funds and ETFs we track).
It has been my experience talking with hundreds of individual investors over the years that far too many ignore how much they are paying to own a mutual fund or ETF. Paying an extra 20 or 30 basis points per year can turn into serious money over 20 or 30 years. For this reason, the fund insights also point out those funds you own or track that have expense ratios that are significantly higher or lower than the typical fund in the same category. In this example, four of the five ETFs and all six of the mutual funds have expense ratios below their category average.
In all, there are fund insights that will alert you to funds or ETFs that have performed strongly or weakly relative to their category average for multiple periods; are more or less volatile than the average of their peers; are actively managed (not an index fund) and have a senior portfolio manager that has a tenure of less than one year; and have an expense ratio that is higher or lower than the typical fund in their category.
We are also putting the finishing touches on a weekly A+ Investor Insights email that will provide data and analysis related to your portfolios, delivered via email every Saturday. The plan is to launch the Insights email in the next couple of weeks, so be on the lookout.
If you have any questions or comments about this week’s topic, or have anything to say about A+ Investor, reach out to us directly at aplus@aaii.com.
