How to use Vanguard Portfolio Watch for rebalancing

livesoft · Post by **livesoft** » Thu Nov 06, 2014 7:23 am

Prompted by another thread and to have something to link to for future threads, here is how I use Vanguard's Portfolio Watch tool to help with rebalancing.

Now includes the following tools:
Vanguard Portfolio Watch
Fidelity GPS analysis
Morningstar X-ray tool
Personal Capital
TDAmeritrade Morningstar X-ray analysis

Edit 02/10/2017. I also show how to use TDAmeritrade's version of Morningstar portfolio X-ray starting at this post:
viewtopic.php?f=10&t=150267&p=3233805#p3233805

Edit 12/12/2016. I also show how VPW tells me my portfolio AA "varies from your long-term target." viewtopic.php?p=3146881#p3146881

Edit 9/14/2015. I also show how rebalancers can use the Fidelity Guided Portfolio Summary (GPS) in the same way below: viewtopic.php?p=2248876#p2248876
and how to use the Morningstar Portfolio X-ray tool: viewtopic.php?p=2248882#p2248882

1. My desired asset allocation. I think it is well-known on the forum that I like to slice-and-dice with a small-cap and value tilted portfolio. Furthermore, I like to have US and foreign equities about equal. I also like prime numbers. So my desired asset allocation is:
29% US equities
29% foreign equities
31% fixed income
05% short-term
07% TIAA Real Estate Account (TREA) [Update: In March 2020, I sold all my TREA and moved the money into a bond fund, so references to TREA below no longer reflect my current asset allocation.]

Those add up to 101% which is a nice prime number. You will see that the 5% short-term is just because it is a prime number and Vanguard pulls out some short-term stuff with the Portfolio Watch tool from the various funds I own. In reality, I have about 35% fixed income for my asset allocation.

2. My assets. I enter all my assets at Vanguard under the "My Accounts/Balances & holdings/Outside investments" page. I just manually enter these accounts and do not have the share amounts automatically updated, Because the share amounts change rarely, I just update the share amounts manually every once in a while.

3. Portfolio Watch. I click on My Accounts/Portfolio Watch and it presents how it thinks my assets are divided up. Right now it looks like this:

(I am in the process of updating the images lost when tinypic went defunct. BTW Adobe Flash is obsolete and should NOT be used by anybody anymore. Shame on you Vanguard!)

a. I have previously told Portfolio Watch (PW) my desired asset allocation. Since PW does not let one enter a value for "Other" and I want TREA, I usurp PW's meaning for "Short-term reserves" to be my meaning for "TREA". I put 6% there, but I suppose I should change it to 7% Besides PW requires 100% and doesn't like prime numbers like I do (see how I don't worry about it?).
b. See that "OK, Your current asset allocation closely matches your long-term target." I can stop here if I want.
c. Below the graphic is "View my asset allocation …." which I click on to get to the next post.
[Edit 05/22/2017]
Also below the graphic is a new link "Learn more about this analysis" which goes to to the "fine print" explanation of this tool which has been added since this discussion first started. The fine print explains some of the limitations of Vanguard Portfolio Watch. I discuss one limitation in an update to this thread: viewtopic.php?p=3378020#p3378020

Edit to add:
d. I do not use ANY balanced funds that mix equities and fixed income or that mix domestic and foreign equities. This allows a relatively clean analysis by all the tools I will show. (Note: we now (2019) have 2 very small inherited IRAs that are in Vanguard LifeStrategy Moderate Growth and Fidelity Freedom Index 2025)

[… I'm dividing this into several posts in this thread … so please wait for the next installment …]

livesoft · Post by **livesoft** » Thu Nov 06, 2014 7:30 am

… when I click on "View my asset allocation dollar/percentage breakdown by holding" I go to:

I now see how my US versus foreign split is and how my US large-cap versus US mid/small is. Since I am a slice-and-dice small and value tilted, I want US large-caps to be between 45% and 50% of my US holdings. The above graphic shows I am close enough with both of these splits. Don't forget that "Other" is really "TREA".

If I move down below the graphic on the VG website I see the breakdown. For instance, here is the top bit showing what Vanguard considers short-term reserves:
[... image missing...]

These are things that I've mentioned before on the forum, like my HSA minimum to get no fees, my foray into Treasury Direct and I-Bonds, and my checking account. Below this comes the Bonds, US equities, foreign equities, and OtherTREA.

livesoft · Post by **livesoft** » Thu Nov 06, 2014 7:51 am

I go back to the main PW page, and next I click on the "Stock Analysis" tab at the top. This graphic appears:

which confirms my US/foreign split. Looks good to me.

Some of the info displayed below this is not that useful to me, so I ignore it. In particular, the US equities Market Cap and Style breakdown is not done as correctly like the Morningstar Portfoliow X-ray tool does it, so I ignore it. For instance, I ignore this graphic:

The other info I like to see is how much Emerging Markets the portfolio has:

Presently, I do not wish to overweight nor underweight emerging markets, so I am good to go.

anil686 · Post by **anil686** » Thu Nov 06, 2014 7:53 am

Thanks so much for this information

bengal22 · Post by **bengal22** » Thu Nov 06, 2014 7:57 am

I use the Vanguard Portfolio as well. It is a good tool. However, it refuses to treat the Fidelity Total U.S. stock index properly(counts it as 100% large cap) so I have to go to Portfolio analysis and subsitute the Vanguard Total US Stock Index to get an accurate account for small and mid cap stocks. I have written them but they said that they use the Morningstar 9 box but that is inaccurate. So it takes me a little longer but it is a good tool. The Fidelity web site has a similar tool.

livesoft · Post by **livesoft** » Thu Nov 06, 2014 8:01 am

Now at the bottom of PW is the following:

which can be clicked on and goes to the Portfolio Tester™ page. I don't use this that often, but basically it is an empirical or "trial-and-error" tool to test how moving money from one fund to another will change the results of PW (that is, change your asset allocation). It is pretty easy to use.

For myself, I can see that I have more than 29% of US equities and am light on fixed income. My foreign equities are close to 29%. Thus, if I was so inclined or if my rebalancing band had been reached, I would just move 1% of my total portfolio value from US equities to fixed income. I can easily do this in my 401(k) by moving some S&P500 index fund found there to a Total US bond index fund found there. 1% is easy to calculate, but I just round it off to the nearest thousand dollars or so. If I put that into Portfolio Tester and click "Analyze", I get:

livesoft · Post by **livesoft** » Thu Nov 06, 2014 8:05 am

That's basically it. But I want to leave with a final point:

My asset allocation is NOT based on the percentages in each fund that I have. It is based on the percentages in each asset class that I have.

Thus, if I want 29% US equities and half of that in large-caps, I don't really care too much which account or which fund that fits into. I can put it in an IRA as Vanguard Total Stock Market Index fund, in a joint taxable account as Vanguard Large-cap index fund, or in my 401(k) as Fidelity Spartan Advantage S&P500 index fund. I will choose the account and fund based on taxes and transaction costs both of which I want to be zero.

I hope this thread helps some folks with understanding how rebalancing can be easy.

TheTimeLord · Post by **TheTimeLord** » Thu Nov 06, 2014 8:09 am

livesoft · Post by **livesoft** » Thu Nov 06, 2014 8:25 am

For completeness, I will show the Fidelity GPS tool and the Morningstar Portfolio X-ray tool.

1. Fidelity GPS. It is available under the Analysis tab. When I click on that tab, I get an analysis of just my Fidelity accounts which is not what I want:

I have entered my "outside Fidelity" info manually. Once again I just put the share amounts and do NOT link to other accounts. That "3 of 6" are my 3 Fidelity accounts. The other 3 accounts are not really accounts but holdings grouped for my convenience.
Holding 1: All my US equities.
Holding 2: All my International equities.
Holding 3: All my non-Fidelity holdings including US equites, international equities, fixed income, and TREA.
When I set that up and select the Fidelity accounts and Holding 3, (4 of 6 accounts), I get:

If I click on the "Stock Analysis" tab, I get a legitimate 9-box style grid for all equities in my total portfolio:

If I update to only Holding 1 (all US equities) and do a Stock Analysis, I get:

Thus I can see that my US breakdown (and in a similar way my international breakdown) is close to my desired style grid of small-cap and value tilted.

livesoft · Post by **livesoft** » Thu Nov 06, 2014 8:30 am

2. Morningstar Portfolio X-ray

I have entered my portfolio manually into the M* Portfolio Manager, then I click on the X-Ray tab. I get the usual cash, US, foreign, bonds breakdown and the following 9-box style-grid:

I can have separate portfolios for my US equities (Holding 1), foreign equities (Holding 2), etc. and analyze them separately.

Edit to add:
d. I do not use ANY balanced funds that mix equities and fixed income or that mix domestic and foreign equities. This allows a relatively clean analysis by all the tools I have shown.

And again the reminder:
My asset allocation is NOT based on the percentages in each fund that I have. It is based on the percentages in each asset class that I have.

Ignatious P. Daily · Post by **Ignatious P. Daily** » Thu Nov 06, 2014 8:34 am

Seems really complicated.

I total up my investments then multiply by 0.75. If my equity allocation is under that, I buy Vanguard total world. If it is over that, I buy TBM or Vanguard Intermediate Muni fund.

I don't have pretty pictures. Sorry.

dbr · Post by **dbr** » Thu Nov 06, 2014 9:02 am

livesoft wrote:Prompted by another thread and to have something to link to for future threads, here is how I use Vanguard's Portfolio Watch tool to help with rebalancing.

1. My desired asset allocation. I think it is well-known on the forum that I like to slice-and-dice with a small-cap and value tilted portfolio. Furthermore, I like to have US and foreign equities about equal. I also like prime numbers. So my desired asset allocation is:
29% US equities
29% foreign equities
31% fixed income
05% short-term
07% TIAA Real Estate Account (TREA)

Those add up to 101% which is a nice prime number.

Not after you give me 1% of your assets as a licensing fee for the idea!

You will see that the 5% short-term is just because it is a prime number and Vanguard pulls out some short-term stuff with the Portfolio Watch tool from the various funds I own. In reality, I have about 35% fixed income for my asset allocation.

placeholder · Post by **placeholder** » Thu Nov 06, 2014 1:34 pm

Recently I started using the Fidelity analysis tools but really only to aggregate my holdings and use a Excel export of the holdings to link with my own asset allocation spreadsheet.

beyou · Post by **beyou** » Fri Nov 07, 2014 1:22 pm

I use this tool almost the same way as described.

The tool itself is easy to use, the only part you need to think about is when
you want to include outside investments that are not Vanguard funds.

You need to be both creative and accept that you must focus on the forest and not the trees.
To include a 401k that contains non-public finds, one must find something to proxy that account
that will come CLOSE ENOUGH to the right AA of the fund. Some can't handle CLOSE ENOUGH
but we are not trying to put a man on the moon, just manage risk, which is an imprecise goal
so it's OK to use reasonable but imprecise tools.

Examples :

My 401 has funds with public mutual funds named very similarly, with similar goals.
My 401k site says the target is 70/30 US/International, but the public fund is 60/40 US/Int.
As this is one of my multiple equity funds, not going to lose sleep, the eq/bond allocation is more
critical than the US/int IMO, and there is no perfect break out between the 2 anyway.

I have US Savings bonds, which I wanted to include. I proxied this with
VFIRX Vanguard Short-Term Treasury Fund Admiral Shares

Another option for both of the above is to create dummy funds and set the attributes yourself,
such as high/medium/low credit and int rate risk on bond funds. This used to work well,
but some bug was introduced years ago, such that if you look at your total credit or rate sensitivity
data, your entries are ignored and the fund is uncategorized. I found it better to use proxy
funds that PW knows about, especially VG funds, but even other public funds are better than
dummy funds where you enter the fund attributes. Vanguard knows of the problem and will not fix it.
Claim it's out of their control. Only downside is that proxy funds will fluctuate in value a bit
differently than your real asset (better than having an equity fund that does not fluctuate at all).

Good post, especially since there is so much bashing of PW on this site.
I thought I was the only person who found it helpful.

livesoft · Post by **livesoft** » Fri Nov 07, 2014 1:47 pm

Thanks. And thanks for the advice about finding suitable proxies for investments without public ticker symbols.

I used to use a proxy fund for TREA, but just decided to have it called "Other" and made sure it was my only "Other".

fposte · Post by **fposte** » Fri Nov 07, 2014 2:15 pm

I love Portfolio Watch--it's not perfect, but it's still really helpful, and I love a good pie chart. I've used it a lot recently as I've been exchanging individual stocks into mutual funds, so the Portfolio Tester option helps me goof around with scenarios for purchase and reinvestment.

I proxy some funds (I've got CITs in my 457 that track indexes, so I just use funds that track the same index) and then manually input stuff that's short on analogues.

Jazz56 · Post by **Jazz56** » Fri Nov 07, 2014 2:46 pm

Thanks very much for sharing Livesoft - your effort is really appreciated!

staythecourse · Post by **staythecourse** » Fri Nov 07, 2014 3:26 pm

Man I feel like I had 88 instead of 38.

I just do this thing old school. I just make columns on a legal pad for each new month. I just calculate how much and where additional money needs to be added. It takes about 30 minutes one time per month. I sort of like pulling out the old calculator and punching the buttons. Interesting enough I NEVER use $ signs and just treat everything I write down as just digits on a page.

The cost basis on Vanguard helps me figure out the TLH situation.

Good luck.

Post by **LadyGeek** » Sat Nov 08, 2014 4:00 pm

This thread is now in the Investing - Theory, News & General forum (investing theory).

This thread is also in the wiki. Twice. See: Vanguard Portfolio Watch and Rebalancing

Vanguard does not have an automated way to rebalance funds using online access. You can only buy/sell specific share amounts. However, there's a spreadsheet for that.

In the "Spreadsheets" section of the rebalancing article, download the Rebalancing spreadsheet. The last option "Rebalance by Desired Funds to Transfer" is designed for Vanguard's website.

(Editing the wiki is a collaborative effort. Click on the "View history" tab of each article - upper right corner - to see who did the updates.)

livesoft · Post by **livesoft** » Sat Nov 08, 2014 6:20 pm

staythecourse wrote:It takes about 30 minutes one time per month.

I just timed with a stopwatch how long it took to open a browser window, login to Vanguard, get to the first figure in this thread, and see if I needed to rebalance. It took 43 seconds.

So once things are set up, it takes less than a minute to make a rebalancing decision. One could make that decision easlly every day while cooking one's oatmeal. Of course, probably 99.9% of the time the decision would be: "No rebalancing needed today."

Abe · Post by **Abe** » Mon Dec 01, 2014 11:44 am

livesoft:
Thanks for posting this. I have a hodgepodge of investments accumulated over the years, and I didn't know exactly where I was as far as a breakdown on asset allocation. I sat down Sunday and entered mostly everything I have in Portfolio Watch. I have more work to do, but at least now I have a better idea of where I am. I would like to consolidate as much as possible and go to something like the 3 fund portfolio. I know I can't do this completely because of the capital gain tax, but this is a good start. I see PW has a place where I can enter my cost basis. I have not done this yet, but this will help tremendously in helping me decide what to sell or not sell as far as tax considerations. Thanks again.

mattatl · Post by **mattatl** » Tue Dec 23, 2014 1:25 pm

What about Personal Capital's graphic asset allocation tool? Looks far more sophisticated and robust than Portfolio Watch, and the limited testing I've done with it gave the same results as Morningstar X-ray (but for free).

livesoft · Post by **livesoft** » Thu Jan 01, 2015 11:45 am

mattatl wrote:What about Personal Capital's graphic asset allocation tool? Looks far more sophisticated and robust than Portfolio Watch, and the limited testing I've done with it gave the same results as Morningstar X-ray (butpi for free).

I have not used Personal Capital myself. I just looked at the web site and I must say it was not inviting. In particular, the screen grabs of their tools are displayed so small that one cannot read any of the text on my laptop and the screen grabs cannot be enlarged to read the text either. If they wanted to attract customers they would provide a way to test drive the software without registering which is what Morningstar does as do some online brokers.

Many folks registered at TRowePrice in order to use the M* portfolio X-ray and manager for free. I don't know anyone who pays for this.

livesoft · Post by **livesoft** » Thu Jan 01, 2015 12:05 pm

Edit: I was able to find out how to enter accounts manually, so that one does not need to provide login credentials to one's accounts. See below.
OK, I tried to use Personal Capital and gave up. It seems to require that one link accounts to itand that is not going to happen with my accounts.

At least with the tools I described in this thread (Vanguard Portfolio Watch, Fidelity GPS, and Morningstar Portfolio X-ray), one does NOT need to link any external accounts at all, but can simply manually enter ticker symbols and number of shares and have all of those persist without having to re-enter them at any time. Yes, one will need to update number of shares occasionally (but not share prices), but that's the price one has pay for less intrusions into one's life. A benefit of entering number of shares manually is that there is a "nudge" not to change the number of shares too often. Or in other words, there is suppression of trading.

So if one could avoid linking accounts at Personal Capital and instead manually enter bogus account names like "401(k)" and "Roth IRA" plus their investments, then maybe I can try them out.

cfs · Post by **cfs** » Thu Jan 01, 2015 12:35 pm

Thank you.

Good conversation, thanks to our shipmate LS for all you do. I have used the portfolio watch for my re-balancing act for years. Done with the re-balancing for 2015 this morning and now is up to Miss Market to do what she always does. One thing I have noticed is the slight difference when entering the same portfolio in Morningstar's Instant X-Ray tool, but good enough for government work anyway. Wishing everyone another good year in the markets. Ignore the noise. Invest slowly and for the long run. Maintain constant course and speed, steady as she goes. Now closing for my Cyber-Sabbaticus.

SpringMan · Post by **SpringMan** » Thu Jan 01, 2015 12:51 pm

I can add my opinion on Personal Capital since I linked up all investment accounts. Personal Capital is free and works well as an aggregator. They make their money from those allowing them to manage their portfolio for which they charge about 3/4 of a percent depending on assets under management. They gave me a portfolio review which is a sales pitch. They use individual stocks and ETFs and claim to equal weight stock sectors. No way was I going to let them manage my portfolio. Their ideas differ from mine completely. For one thing their free portfolio analysis uses a strange asset allocation model. According to them REITs are not equities. My desired 40/60 allocation would need to be supplemented by a slice of REITs coming out of the 60% fixed income side. They did not consider that index funds include some REITs. They also feel it necessary to include commodities as an asset class. When asked what they used, it was DBC. Maybe it is just recency bias but I would not touch DBC with a 10 foot pole. Personal Capital is fairly new and has not been around during a bear market. Bottom line is it is an okay free aggregator for those that need such a service. They shoot you an optional weekly email with how your portfolio did, up or down by percentage. Since most brokerages will also do this aggregation, Bogleheads need not waste their time even on the free stuff.

gas_balloon · Post by **gas_balloon** » Wed Jan 07, 2015 6:54 pm

Thanks for this very informative post. I use a Google Spreadsheet and GOOGLEFINANCE API call to track everything for me.. pretty similar to how the Vanguard PW works though.

csimpson · Post by **csimpson** » Fri Jan 09, 2015 12:49 am

I use Personal Capital and find it very helpful for looking at AA,fees and returns over multiple brokerage accounts. You can add accounts and their corresponding stocks/bonds/funds manually if you don't want to provide login/password info.

fourniks · Post by **fourniks** » Fri Jan 09, 2015 8:21 am

I also think this is a valuable tool for rebalancing and buy/sell scenarious to keep within my AA.

However, unless I'm missing something, I noticed that the Portfolio Watch does not break out/account for International Bond allocation. I have most of my tax advantaged space in Vanguard Target Retirement funds which include a percentage of Vanguard Total International Bond fund. It is never accounted for in the Bond breakout.

Kerry

livesoft · Post by **livesoft** » Fri Jan 09, 2015 8:34 pm

csimpson wrote:I use Personal Capital and find it very helpful for looking at AA,fees and returns over multiple brokerage accounts. You can add accounts and their corresponding stocks/bonds/funds manually if you don't want to provide login/password info.

I reinvestigated this and now see that manual entry is possible. They had put the manual entry such that it was scrolled down off the page and not displayed. Thanks for making me go looking. I will now investigate this further.

livesoft · Post by **livesoft** » Sat Jan 10, 2015 4:45 pm

I used Personal Capital (PC) to manually enter my portfolio to test its features. It was worthwhile, but I don't think I will be using PC except vary occasionally. Here are a list of comments, then some screen grabs below.

1. PC tries too hard and breaks down some funds into too many asset classes. I just do not care if VBR has 0.01% in cash or 2% in REITs or that VTI has 0.01% in emerging markets. Thus, it reduced my percentage of US stocks while increasing my percentage of Cash and of Alternatives, plus a bunch of other things. So too much unneeded detail even for me. I can see users of PC freezing into Analysis Paralysis over things that just do not matter in my opinion.

2. The way one can "drill down" into any class to see the subclasses and the sub-sub-classes is easy to figure out, BUT each class or subclass or sub subclass is given a percentage of total portfolio value and NOT a percentage of its parent class. For instance, if I have 50% US equities and 10% of those are small-cap value, then the small-cap value percentage will be 5%. Or if I want to know the percentage of international that I have in emerging markets, then PC does not show this. Instead, I have to calculate it myself from the numbers presented.

2. PC is lacking in other detail. The US stocks get a sort of Value/Blend/Growth/Small/Mid/Large graph, but the Foreign stocks do not. The foreign equities are divided between Developed and Emerging, but not between Large to Small nor Value to Growth like US equities are.

4. PC lets one manually override the class percentages of an asset, so I was able to say that TIAA Real Estate Account was 100% Real Estate and it got placed into the Alternatives class. TIAA was called TIAA traditional and it also got placed in Alternatives instead of in bonds. For this exercise, I did not change it from the way PC described it.

5. Since I signed up, I get about an e-mail a day from PC, so don't sign up with real e-mail if you don't want to get e-mails. I don't get daily e-mails from the other places I showed previously in this thread where I have accounts.

I let PC suggest an asset allocation for me and it showed a comparison to what I have to compared to what PC suggests:

The allocation for my current portfolio is slightly different than shown previously in this thread, so do not compare what was shown earlier in the thread to what PC shows now which is not inaccurate when I move some of the Alternatives to where they might go with the tools previously shown in this thread. PC nicely suggested that I move some overweighted International Stocks into the underweighted US Stocks and that I reduce cash. I cannot argue with those suggestions since I am in the midst of doing exactly those two things right now.

PC also showed an Efficient Frontier chart which I only show because I have not done anything like this for my portfolio AND it shows my portfolio is efficient with slightly less risk than what PC suggested for an asset allocation for me. There is no way for me to know if the EF graph is BS or not.

I am glad I looked into Personal Capital, but agree with SpringMan about it.

richard · Post by **richard** » Sat Jan 10, 2015 4:52 pm

If you like slice & dice, you might try https://www.portfoliovisualizer.com/factor-analysis. It does Fama-French Factor Regression Analysis.

davidsorensen32 · Post by **davidsorensen32** » Sun Jan 18, 2015 12:56 pm

Vanguard portfolio watch tool is broken. It shows entire boxes with no data even though a large % of my assets are in "total market" kind of funds. There are 2 problems

a) It's analyzing only a fraction of my total US stock holdings. This seems to be a bug in the software.

b) There is no consideration for international stocks or mutual funds whatsoever !!

<--- Note: The tool is analyzing only 13% of my portfolio that it considers to be US stocks and MFs

Which is completely inconsistent with the other views:

<--- Even though the tool mentions everywhere else that 50.6% of my portfolio is US based stocks and MFs

ankonaman · Post by **ankonaman** » Sun Apr 12, 2015 1:51 pm

I agree the tool has many "bugs". I started looking at the "tool results" and noticed it was way off regarding my percentage of large cap US stock vs small/mid cap. Upon further looking into it I noticed that the tool was looking at my "Apple Stock" holdings as a "midcap stock". To Vanguards credit i notified them about this and they rectified the problem. It does make me wonder however how many other glitches there are in this tool.

livesoft · Post by **livesoft** » Sun Apr 12, 2015 1:59 pm

Yes, definitely one has to be aware that not everything can be taken at face value with these tools. That's a reason to use more than one or two such tools and apply caution.

zadie · Post by **zadie** » Sun Apr 12, 2015 6:02 pm

Not taking into consideration the intl is pretty poor. Not sure how one would use this when it doesn't take into acct the intl portion of one's port.

zadie · Post by **zadie** » Mon Apr 13, 2015 4:52 am

For example, when I go into PW, it flags my REIT & small cap holdings as being excessive, but that is b/c it's not factoring in all of the Int'l holdings. I think it may be best used for rebalancing for those that have a simple 3-4 fund port, but for those who slice/dice it's not that useful, (unless I'm missing something). Yes I can see domestic vs Int'l ratio, but when you go deeper into Market caps, it's lacking. So if I wanted to see my % of small cap, I can't really b/c it only shows the % of small cap held in domestic.

Doc · Post by **Doc** » Mon Apr 13, 2015 6:54 am

livesoft wrote:Yes, definitely one has to be aware that not everything can be taken at face value with these tools. That's a reason to use more than one or two such tools and apply caution.

A big problem I see for a firm like Vanguard for asset allocation is what is the data source. A Fidelity or a Schwab is not going to give a Vanguard their data directory. After all they are competitors. They are not supposed to be in "collusion". In the past I observed that Vanguard was using Morningstar asset class data for non-Vanguard funds and actual portfolio data for their own funds. Since only about half of our assets are at Vanguard this makes their AA tool relatively useless. Nearly all fund sponsors use Morningstar data as part of their marketing and they in turn give Morningstar data in a uniform format for M* to massage. Given this it makes a lot of sense to use Morningstar's AA tools.

livesoft · Post by **livesoft** » Mon Apr 13, 2015 7:06 am

zadie wrote:For example, when I go into PW, it flags my REIT & small cap holdings as being excessive, but that is b/c it's not factoring in all of the Int'l holdings. I think it may be best used for rebalancing for those that have a simple 3-4 fund port, but for those who slice/dice it's not that useful, (unless I'm missing something). Yes I can see domestic vs Int'l ratio, but when you go deeper into Market caps, it's lacking. So if I wanted to see my % of small cap, I can't really b/c it only shows the % of small cap held in domestic.

That's true about seeing the style guide of just international or just domestic. That's why I described previously in this thread how one might use Fidelity GPS or M* to get that information.

beyou · Post by **beyou** » Wed Apr 15, 2015 3:02 pm

Vanguard told me they do use M* data, and blame some of the gaps on M*,
insisting they can not fix.

I don't agree, when you create your own asset, and it prompts you to edit attributes,
then ignores those assets, no reason they need M* to store data you enter by hand.

That said, I have found that the tool works well for me since I do have mostly Vanguard funds,
and for other assets, I am able to find substitutes that proxy my assets well (instead of
creating dummy assets and updating the risk and mkt value myself).

brak · Post by **brak** » Wed Apr 15, 2015 4:48 pm

Can anyone explain to me why my Portfolio Watch asset allocation is so different from the one I get on Morningstar Xray. Is it the fact that about 10% of my portfolio is invested in assets outside of Vanguard (but included in my information with Vanguard) iris something else up? And which report is more accurate? Thank you.

livesoft · Post by **livesoft** » Wed Apr 15, 2015 4:53 pm

M* is more accurate I would think. In this thread I noted several problems with the Vanguard tool. Do any of these problems apply to you?

As for the reasons, it is hard to say given what you wrote here. Perhaps you can investigate more.

abuss368 · Post by **abuss368** » Wed Apr 15, 2015 10:24 pm

I like Portfolio Watch but it could improve a few items.

zadie · Post by **zadie** » Fri Apr 08, 2016 5:12 am

In my acct, the overall Stock/Bond ratio in PW matches M*, but when I go into the Stock Analysis tab, things differ considerably:

PW shows: US Stocks 66%
M* shows US Stocks 47%

PW shows Int'l Stocks 34%
M* shows it as: 24%

I have a call setup with my flagship rep on Monday to go over it, but anyone here know why it differs so much?

livesoft · Post by **livesoft** » Fri Apr 08, 2016 5:22 am

@zadie, if you have a fund with BOTH international and US stocks in it, then I suspect Portfolio Watch will not split the US and intenational correctly. You may be able see this by clicking on the "View domestic vs international dollar/percentage breakdown by holding"* or other ""View ..." links where the details are shown.

*It's right below the pie chart shown in this previous post: viewtopic.php?p=2248842#p2248842

in_reality · Post by **in_reality** » Fri Apr 08, 2016 5:25 am

zadie wrote:In my acct, the overall Stock/Bond ratio in PW matches M*, but when I go into the Stock Analysis tab, things differ considerably:

PW shows: US Stocks 66%
M* shows US Stocks 47%

PW shows Int'l Stocks 34%
M* shows it as: 24%

I have a call setup with my flagship rep on Monday to go over it, but anyone here know why it differs so much?

PW looks like it is reporting the US -- Int'l allocation as a % of stocks. That is why it adds to 100%. It's 100% of stocks.
M* looks like it is reporting US and Int'l as a percent of total holdings. You have about 30% in cash/bonds right?

zadie · Post by **zadie** » Fri Apr 08, 2016 5:32 am

livesoft: I don't have any holdings with both international and US stocks in it

in_reality: Yes about 30% FI/Cash that PW would see.

When considering domestic/int'l equity allocations, should one use % of stocks rather than a % of portfolio? Just trying to figure out which tool to use.
Would be nice if PW was accurate so I can just use that, rather than having to manually enter in the holdings into M*

in_reality · Post by **in_reality** » Fri Apr 08, 2016 5:40 am

zadie wrote:livesoft: I don't have any holdings with both international and US stocks in it

in_reality: Yes about 30% FI/Cash that PW would see.

When considering domestic/int'l equity allocations, should one use % of stocks rather than a % of portfolio? Just trying to figure out which tool to use.
Would be nice if PW was accurate so I can just use that, rather than having to manually enter in the holdings into M*

Well usual people usually quote domestic/int'l equity allocations as a % of stocks rather than a % of portfolio.

i.e.
80% stocks 20% bonds
70% US 30% Int'l

I don't as often hear people say: 56% US, 24% Int'l 20% bonds, but that doesn't mean you couldn't think about and track your portfolio that way. The OP in this thread did.

Saying 56% US 24% Int'l kind of obscures the fact that it's 70% US 30% Int'l. But whatever works for you!

Quark · Post by **Quark** » Fri Apr 08, 2016 5:41 am

How do you treat savings bonds and CDs?

You can have manually tracked values in Outside Investments, but must characterize them. If you have too much in "other", then PW's Bond Analysis won't do a full report. These investments seem closer to "short-term reserves" than "bond", because values don't fluctuate with market interest rates, but I wonder how others treat them.

I also wonder how others treat them when calculating the average maturity and duration of a portfolio.

livesoft · Post by **livesoft** » Fri Apr 08, 2016 5:43 am

PW also reports US/foreign breakdown as percentage of holdings as I showed here: viewtopic.php?p=2248829#p2248829'

I put fixed income that cannot fluctuate in value from interest rate risk as "short-term reserves". So my TIAA traditional is called short-term reserves. I actually don't really care about average maturity and duration anyways. I can look at the breakdowns shown and think "That's nice, but so what?"