Some of the Best Tools on the Web
Great features on fund company Web sites can solve lots of problems.
Great features on fund company Web sites can solve lots of problems.
We Morningstar analysts spend lots of time digging up information on the Web. We're all over the SEC's Edgar database sites, we follow a bunch of sites for financial news, and of course, we watch fund company Web sites closely.
Here, I thought I'd share some of the best tools, features, and articles we've found on fund company Web sites. Fund companies know that they can win customers by providing helpful information--not marketing dross--on their Web sites, and some have gotten pretty innovative.
For the Stock Jock
Diamond Hill, the company that runs Fund Analyst Pick Diamond Hill Small Cap (DHSCX), has a nifty intrinsic value calculator that gives you a sense of how the firm looks at the world. You plug in a ticker and it will produce an intrinsic value and expected return. Of course, the firm actually does a lot more work before buying a stock, but it's an interesting tool.
Or you can instead run a screen to come up with some good stock ideas. Hedge-fund manager Joel Greenblatt, who wrote The Little Book That Beats the Market, has created a Web site that lets you screen for stocks that fit his magic formula. Plug in a minimum market cap and the number of companies you want to see, and you're off. To learn more about the book and Greenblatt's insights, click here for Morningstar analyst John Coumarianos' review.
Tax-Related Answers
Franklin Templeton has created a nifty little tool for 529 investors. It lets you see how valuable a state tax break on a 529 plan is. That makes it easier to decide if you should stay in state with your 529 investment. You plug in the years to college, planned contributions, estimated annual return (be conservative as bond yields are in the 4%-5% range), your state, your income, and your filing status. The biggest problem with 529 plans is complexity, so this tool is a big help.
Meanwhile, Morgan Stanley has a clever tool for helping you decide if you should buy munis or taxable bonds. Just plug in the yield of a muni-bond fund you're considering, choose your state's tax rate, and select your federal tax rate, and it will tell you the taxable equivalent. You can then compare that with a yield from a comparable taxable bond fund to figure out which is a better deal for you. There are other taxable equivalent tools, but I like this one because it has the state tax rates available in a drop-down menu. This works for individual bonds as well, but individuals get such bad prices on munis that you're usually better off in a muni fund with professional management.
Your Fund Management Bill in Dollar Terms
The fund industry has hugely benefited from the fact that its fees are quietly taken out every day and are quoted in percentage terms. If, instead, you were handed a bill for its services at year-end, you might scream. So, big points to MFS for making it easy to see how much you pay in dollar terms. You choose the fund and dollar amount invested and you're all set. I just plugged in a $10,000 investment in MFS Global Growth (MWOFX) and it tells me I would pay about $3,000 in fees over the course of a 10-year investment. It even shows the math in terms of what I'd pay each year.
Performance Attribution
Want to know why Fidelity Small Cap Retirement (FSCRX) has had a rough go of it or why Fidelity Small Cap Value (FCPVX) has done well? Fidelity has a page called portfolio characteristics and attribution that lets you see what's helped and hurt relative to the fund's benchmark. Pull up the fund's research page, scroll halfway down to Performance, and you'll find a link under the total returns tables. You'll see that security selection in tech and financials has hurt Small Cap Retirement. Conversely, security selection of industrials has been a boon to Small Cap Value.
Tools on Morningstar.com
Of course, the best suite of tools can be found right here on Morningstar.com. We have cool tools for comparing funds, looking for funds similar to closed funds, seeking out risks in your portfolio, comparing costs among funds, and more.
What are your favorites? Did I miss one of your favorite investment tools? If so, send me a link. I'd love to hear about it.
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