Gauge the level of your portfolio’s overall diversification with this free on-line tool
Whenever you invest in multiple mutual funds and ETFs, you may wonder how broadly and appropriately diversified your aggregate portfolio might be. Have your investment holdings and mutual funds that you have chosen increased the global diversification of your personal financial asset portfolio? Do they just duplicate what you already own?
There is a free on-line tool that you can use to measure your portfolio diversification, and better understand the relative contribution that each of your investments makes to your goal of holding a broadly diversified global investment portfolio. On the Morningstar website, you can find their “Instant X-Ray” tool. Go to the Morningstar site at http://www.morningstar.com/
Click the “Tools” tab in the horizontal bar, select the “Morningstar Tools” pull down menu, and then choose “Instant X-Ray.” To go directly to this tool, use this URL:
http://portfolio.morningstar.com/NewPort/Free/InstantXRayDEntry.aspx
To use the Instant X-Ray Tool, just enter the ticker symbols for all of the mutual funds, ETFs, and individual securities that you own or intend to own with the dollar value of each holding. Then, click “Show Instant X-Ray” to see a summary of your overall portfolio.
Note that when you enter only one mutual fund or ETF ticker symbol or only one stock or bond holding into the Instant X-Ray Tool, the summary provides data for that single fund or security. This can be very useful, as you evaluate individual investment funds and investment securities. When you enter multiple funds, you will get an overview that blends all the funds and securities in proportion to the dollar values that you enter for each holding.
This free Instant X-Ray summary provides a variety of data about your overall portfolio. The overview allows you to evaluate how diversified your portfolio is on a variety of dimensions, including the major dimensions that are summarized in the other articles on this website about selecting a broadly diversified investment portfolio. (See the Sitemap for these articles.)
Incidentally, if you click on the other views that are offered with the Instant X-Ray tool, then Morningstar will try to get you to sign up for a “Premium” subscription. The information provided by this free summary overview in the Instant X-Ray tool is sufficient, and you are not required to pay for a premium subscription.
Note that there is no relationship between this website and Morningstar, and this website did not receive any form of consideration, financial or otherwise, to write this article. The “Instant X-Ray” is a useful financial tool for individual investors, and that is why we have provided this article.
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