Portfolio X-Ray
No, this isn't another post about ASEI -- though I'm still very impressed with their backscatter x-ray technology.
I recently went to Morningstar and tried the free portfolio X-Ray for the first time in at least six months, and I thought I'd post the results here -- I'm usually a bottom-up investor focused on individual companies, but it can be very useful to take a step back and see what your portfolio looks like on a sector, country, or market cap basis.
Here are the results of my X-Ray, along with my comments:
I'm pretty happy with this allocation overall -- I think 30% is a decent portion of the portfolio to allocate to overseas, and given my time horizon I'm not interested in holding bonds at this point (though in my retirement account, which is entirely in TIAA-CREF and not included in this
portfolio, I have some minimal bond exposure).
The "Other" category here consists of my pink sheet foreign stocks, which Morningstar can't classify, so the foreign exposure bumps up to about 36% if you include SeaDrill and Keppel. Still, think that's fine -- very few of my international holdings are purely domestic, with the exception of GOL.
Again, I think this looks pretty reasonable. The European exposure is largely through my Dodge and Cox International holdings, which I don't talk much about, but although I'm probably underexposed to Japan I think the rest of this looks reasonable on its face.
This is probably not too surprising for anyone who has looked at my postings or my portfolio composition, but I have offset my large cap stock holdings (Berkshire Hathaway and a big position in Dodge and Cox Stock, for the most part) with a lot of small and mid cap speculative growth companies. That also explains why most of my portfolio is performing so badly of late (I don't track my mutual fund holdings in my portfolio on this site, and don't watch them very closely).
This is the part of the X-Ray I was most interested in seeing -- the sector breakdown. I was wondering how diversified I was across the major sectors, and while there are some big discrepancies I think overall this is a fair picture of diversification. A couple big adjustments would be made to Energy and Industrial Materials if SeaDrill and Keppel were properly categorized (though it's hard to categorize Keppel accurately, with their real estate, rig-building, and oil refining assets).
I was a little surprised that financial services were so overweight in my portfolio, but then realized that's where insurance is classified, so Berkshire and Markel are forcing me well over the line there, in addition to my UBS holdings. I like both of those companies very much, and given their large holdings its not that fair to classify them as just insurance companies, but that overweight is certainly something I'd want to keep an eye on. I'm underweight in all consumer areas, which seems smart at the moment, and underweight in tech hardware and telecom, which seems fine -- though some of those tech companies are looking pretty appealing these days and that underweight might end soon. Software is well represented in my portfolio thanks to Blackboard and Click Commerce, though at this point I wish the magnitude of those two holdings was reversed given CKCM's tough slide.
Since I don't publicize the actual dollar amount of my holdings, I thought some folks might be interested in this top 10 list -- probably no surprises there, since I write about many of these companies pretty frequently. If you scroll down the list, numbers 11-15 would be MEMC Electronic Materials, Click Commerce, Chesapeake Preferred, iSHares Korea, and Exelixis, just FYI.
And these final stats probably don't mean much in the aggregate, though they reinforce the fact that I've largely focused on growth and smaller cap companies without yields or high price/book values. I find it a little disturbing that the ROA and ROE of my portfolio are quite a bit below S&P benchmarks, but I think those numbers are more relevant in the consideration of individual companies -- might be something for me to pay more attention to going forward.
I do appreciate that the effective PEG ratio of my portfolio as a whole is .88, and I like to think of it this way: I'm getting companies that are growing 50% faster than the S&P, at just about the same average multiple as the S&P. That's why there's more risk in my portfolio, and why I've done quite poorly this year so far (along with, of course, the standard risk of having chosen some crummy stocks), but as a long term investor with a decades-long time frame I'm happy with those parameters.
This won't change me into a top-down investor, but it's always worthwhile to see how the portfolio looks from a distance -- and this will point me at a few things to take note of as I make buying and selling decisions in the months to come. I strongly recommend that anyone with a relatively complex portfolio try out this free tool from Morningstar (or pay for the more advanced one, if you're feeling curious).
I recently went to Morningstar and tried the free portfolio X-Ray for the first time in at least six months, and I thought I'd post the results here -- I'm usually a bottom-up investor focused on individual companies, but it can be very useful to take a step back and see what your portfolio looks like on a sector, country, or market cap basis.
Here are the results of my X-Ray, along with my comments:
I'm pretty happy with this allocation overall -- I think 30% is a decent portion of the portfolio to allocate to overseas, and given my time horizon I'm not interested in holding bonds at this point (though in my retirement account, which is entirely in TIAA-CREF and not included in this
portfolio, I have some minimal bond exposure).
The "Other" category here consists of my pink sheet foreign stocks, which Morningstar can't classify, so the foreign exposure bumps up to about 36% if you include SeaDrill and Keppel. Still, think that's fine -- very few of my international holdings are purely domestic, with the exception of GOL.
Again, I think this looks pretty reasonable. The European exposure is largely through my Dodge and Cox International holdings, which I don't talk much about, but although I'm probably underexposed to Japan I think the rest of this looks reasonable on its face.
This is probably not too surprising for anyone who has looked at my postings or my portfolio composition, but I have offset my large cap stock holdings (Berkshire Hathaway and a big position in Dodge and Cox Stock, for the most part) with a lot of small and mid cap speculative growth companies. That also explains why most of my portfolio is performing so badly of late (I don't track my mutual fund holdings in my portfolio on this site, and don't watch them very closely).
This is the part of the X-Ray I was most interested in seeing -- the sector breakdown. I was wondering how diversified I was across the major sectors, and while there are some big discrepancies I think overall this is a fair picture of diversification. A couple big adjustments would be made to Energy and Industrial Materials if SeaDrill and Keppel were properly categorized (though it's hard to categorize Keppel accurately, with their real estate, rig-building, and oil refining assets).
I was a little surprised that financial services were so overweight in my portfolio, but then realized that's where insurance is classified, so Berkshire and Markel are forcing me well over the line there, in addition to my UBS holdings. I like both of those companies very much, and given their large holdings its not that fair to classify them as just insurance companies, but that overweight is certainly something I'd want to keep an eye on. I'm underweight in all consumer areas, which seems smart at the moment, and underweight in tech hardware and telecom, which seems fine -- though some of those tech companies are looking pretty appealing these days and that underweight might end soon. Software is well represented in my portfolio thanks to Blackboard and Click Commerce, though at this point I wish the magnitude of those two holdings was reversed given CKCM's tough slide.
Since I don't publicize the actual dollar amount of my holdings, I thought some folks might be interested in this top 10 list -- probably no surprises there, since I write about many of these companies pretty frequently. If you scroll down the list, numbers 11-15 would be MEMC Electronic Materials, Click Commerce, Chesapeake Preferred, iSHares Korea, and Exelixis, just FYI.
And these final stats probably don't mean much in the aggregate, though they reinforce the fact that I've largely focused on growth and smaller cap companies without yields or high price/book values. I find it a little disturbing that the ROA and ROE of my portfolio are quite a bit below S&P benchmarks, but I think those numbers are more relevant in the consideration of individual companies -- might be something for me to pay more attention to going forward.
I do appreciate that the effective PEG ratio of my portfolio as a whole is .88, and I like to think of it this way: I'm getting companies that are growing 50% faster than the S&P, at just about the same average multiple as the S&P. That's why there's more risk in my portfolio, and why I've done quite poorly this year so far (along with, of course, the standard risk of having chosen some crummy stocks), but as a long term investor with a decades-long time frame I'm happy with those parameters.
This won't change me into a top-down investor, but it's always worthwhile to see how the portfolio looks from a distance -- and this will point me at a few things to take note of as I make buying and selling decisions in the months to come. I strongly recommend that anyone with a relatively complex portfolio try out this free tool from Morningstar (or pay for the more advanced one, if you're feeling curious).
Labels: portfolio
This article posted by One Guy @ 8/11/2006 11:08:00 AM 0 comments
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