Quality alerts explained

Nov 2, 2020 10:41:05 AM / by InvestorKeep



The first component of investment quality is a measure of the quality of investments held in a particular portfolio. This component measures the characteristics of the companies represented in the holdings.  Are the companies financially strong, operating in stable markets? Are they poor performing with questionable leadership?  Somewhere in between? 

Stocks, bonds, mutual funds, ETFs, etc., are all rated and ranked by a variety of financial analysis firms that measure capabilities across a myriad of criteria: management capabilities, market risk, credit risks, liquidity, earnings, capital adequacy, etc. Each investment is then given a rating. One of the best-known rating companies, Morningstar, assigns investments a number of stars based on their analysis of the investment’s overall quality (1 Star for low, 5 for high).  Ratings, like the investments they measure, change over time and these changes can affect the value and risk of your entire investment portfolio. Investment ratings need to be watched constantly to ensure you are taking the appropriate risk and achieving the optimal level of performance.

The second component of investment quality is the nature of the management of your investment accounts themselves.  Are they being well monitored, is rebalancing occurring (see Investment Fit), is tax loss harvesting performed, is there account churning, etc.?  There are many ways to improve overall investment performance, but the sheer number of accounts and financial transactions can overwhelm financial professionals.  This is especially true of “smaller” accounts (those with less than a million dollars invested, the sweet spot where advisors start to make money).  Chances are your financial accounts do not get all the attention they deserve, ensuring you are optimizing the returns on your money. 

InvestorKeep monitors changes in the quality of your financial accounts and alerts you when notable changes occur that may impact your returns. 

The Quality feature on the Snapshot portion of InvestorKeep dashboard shows where your investments fall in terms of quality.



Written by InvestorKeep

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