With the X-Ray tool, you can take advantage of in-depth market visibility that offers you a look at how your portfolio is allocated across different areas of the market and helps you update your allocations to align with your investment strategy.
The X-ray tool displays the allocations of your current portfolio and an Action Plan Model across market segments, world regions, stock sectors, investment styles, stock types and underlying holdings. The degree to which your allocation is diversified in each category will play a large role in determining the risks and rewards associated with your portfolio. The categories displayed in this section are outlined below.
Asset Allocation - Like the pie charts displayed under the Summary tab, the pie charts in this section help you compare the allocation of your current portfolio and your Action Plan Model by market segment. With a visual representation of each portfolio, you can quickly compare the weight of each segment in both portfolios and determine how the differences fit into your investment strategy.
World Regions – The assets in your current portfolio and Action Plan Model are broken down by geographic region across the Americas, Greater Europe and Greater Asia in this section. Looking at where your investments are located may cause you to reevaluate the assets included in one or both of your portfolios based on your personal strategy. Exposure to different world regions can potentially help you take advantage of different markets and minimize volatility when one market is performing poorly.
Stock Sectors – This section shows you how your portfolio is represented in the cyclical, sensitive and defensive sectors.
Investment Style – The Morningstar Style Box™ displayed for equities and fixed income products is a Morningstar data point that provides a visual representation of an asset's investment style. Knowing the style of an asset can help you make informed comparisons of one asset to another and build a diversified portfolio that includes a wide variety of investment types.
Please read Morningstar's Disclosure Statement for more information.
Top 10 Underlying Holdings – The top 10 holdings of your current portfolio and the Action Plan Model are displayed including the exact percentage of your portfolio dedicated to each holding.
Next Step: Backtest your Action Plan Model with the Performance Review chart.
Alternate Next Steps: After taking a close look at how your current portfolio and Action Plan Model are allocated across several different categories, you may decide that you want to look for new investment opportunities to update your allocations according to an investment strategy. If that happens, you can use Morningstar's Investment Finder under the Summary tab to search for stocks, mutual funds and exchange-traded funds that match your criteria.
If you're satisfied with the allocation shown in the X-ray tool, you can continue evaluating your current portfolio and the Action Plan Model in the Performance Review or Portfolio Concentration sections of the Analysis tab. Once you're comfortable with any changes you suggested through the Action Plan Model, your trades can be executed easily from the Action tab.
Limitations of the X-ray Tool
The X-ray tool does not reflect any short positions in your account. This tool also doesn't reflect option positions.
Keep in mind that while diversification may help spread risk it does not assure a profit, or protect against loss, in a down market.
Past performance of a security or strategy does not guarantee future results. Results could vary significantly and losses could result.
The analytical tools described in this article are for information purposes only and their use does not guarantee a profit. None of the information provided should be considered a recommendation or solicitation to invest in, or liquidate, a particular security or type of security. Investors should fully research any security before making an investment decision.