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By Christine Benz | 07-18-2012 03:45 PM

Session 2: Midyear Portfolio Checkup and Risk Factor Review

Director of personal finance Christine Benz will help you check your true exposures and stress-test your holdings in session 2 of Morningstar's 2012 Midyear Financial Checkup.

Jason Stipp: Next we're going to move to our portfolio piece of the presentation. We've got Christine Benz here. She's our director of personal finance. She has also served as Morningstar's director of fund analysis in the many years that she's spent here with the company. She is also the author of a couple of books including 30-Minute Money Solutions. This is where she walks investors through quick and easy ways to get their financial house in order.

Christine is going to be walking you through how to do a checkup on your portfolio, and interestingly she has got three key risk factors that she is going to have you keep an eye out for. We will have a Q&A session with Christine following her presentation. So please do keep those questions coming specifically on the portfolio section. We'll be taking your questions on that after her presentation.

Also, Christine's slideshow is available for you to download. If you click the link of her slideshow presentation beneath your webcast player, you'll be able to access those slides. So I'd like to welcome now Christine Benz, our director of personal finance. Christine?

Christine Benz: Thank you, Jason, and thanks to all of you for watching today. Before I get into the presentation, I would like to quickly share my overarching philosophy on checking up on a portfolio, and I really have two key parts to the philosophy. The first is less is more. So, I recommend a quarterly checkup at most. I think for many people a semi-annual or even an annual checkup, where you do a thorough review of your overall portfolio and your holdings is just fine. I think the more you check in on how you're doing, the more you're inclined to get in there and monkey around and maybe make some trades that aren’t necessarily in your long-term best interests, and you might also rack up some tax and trading costs along the way. So that is the first ground rule.

The second is to the extent that you possibly can, and I know it can be difficult to tune out performance, but I think it's useful to focus on what fundamentally is going on with your portfolio. So you'll see that in the review that I will talk about as we go forward, I've really focused on fundamental factors that underpin a portfolio.

So let's just give a little roadmap of where we'll go in this presentation. First of all, I'll talk about how to check the viability of your current plan. So if you don't have a lot of time to devote to checking up on your portfolio, think at the very least it makes sense to check up on this and see if you're on track or if you need to make some midcourse adjustments.

The next part of a portfolio review involves taking a look at your aggregate holdings and your aggregate weightings. How do they look like in terms of asset allocation, sector weighting, style exposure, and so forth? The next step of any portfolio review is to dig into individual holdings, and as Premium users of Morningstar.com, you have a lot of tools at your disposal to do that. I'll talk about how to avail yourself of those tools.

As Jason mentioned, I will also talk about troubleshooting some risk factors that I think exist for a lot of investor portfolios these days. So the first three steps are more or less evergreen. These are steps you'd want to take regardless of the market environment. The last step will look specifically at risk factors that lurk for investors right now.

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