I spent a little time tinkering with Google Docs Spreadsheets today, trying to use it to track the asset allocation of my investment portfolio.

GoogleFinance() Function
This function allows you to import data from Google Finance like current stock prices, p/e ratios, or performance. Here is the Google Docs Help page. For example, if you want to pull up the price of a share of Google stock, you’d enter this into a cell.

=GoogleFinance("GOOG"; "price")

Importing Personal Data
I could not find an easy way to import my actual holdings into Google Docs, but I’m not sure if you want that capability due to privacy concerns. Google Docs does allow you to import from RSS or XML feeds. I ended up just manually entering the ticker symbols and number of shares I held for each mutual fund. This means I will have to update my 401(k) funds after each paycheck, and my other holdings when I make a transaction or when a dividend is paid.

Shared Example
Below is a shortened version of my online file, as a quick example.

You can view the full version more easily here. To edit, go to File and click on “Create a copy…”. You can then poke around and change the ticker symbols to your own.

In the full version, I have columns that compare my current asset allocation percentages to my target percentages. This can help people who wish to rebalance when their allocations are off by a certain amount. I can see that I am currently overweight in Emerging Markets due to their recent run-up, and underweight in TIPS. Everything else seems close enough.

The pie charting function seems a little buggy, I couldn’t get it to show the proper labels.

Morningstar.com has a bunch of helpful tools for managing your investment portfolio. Many of them are free, but some require you to be a member. Premium membership is not cheap at $174 a year ($115 with Fidelity account), although you do get other features like mutual fund analyst reports. But since I’m not interested in those, I was happy to discover that most of the free tools and even some of the normally paid tools are available to all at T. Rowe Price. You don’t even need an account with them. Both sites require free registration (basically just e-mail).

Here is a roundup of the tools that are available, along with links to both sites where available. Since many of the tools are integrated, I have found it easier just to keep all my data at T. Rowe Price.

Portfolio Manager (TRP / Morningstar)
Portfolio Manager “enables you to track, rebalance, and analyze your portfolio. It includes a complete picture of all your holdings’ prices and performance – individual securities and funds together – in a convenient one-page format that’s updated throughout the trading day.” You can either track all your transactions as you go, or just input your current holdings. The Morningstar version differs by appearing to be slightly newer, and allows you to import your portfolio from an external Quicken/Money/Broker .csv file.

Portfolio X-Ray and Portfolio Instant X-Ray (TRP / Morningstar)
The Morningstar Portfolio X-Ray tool is a great tool that lets your look “under the hood” of your mutual funds. Does your “small cap” fund really own a bunch of mid-caps and large-cap funds? X-Ray will reveal your true exposure to stock style (i.e. Small/Mid/Large, Growth/Blend/Value), geographical regions (i.e. Japan, US) , stock sectors (i.e. Telecom, Energy), and individual equities (i.e. type, Top 10 holdings).

Also, by looking at your portfolio as a whole, you can see your true asset allocation. Maybe some of your funds have overlap that you didn’t know about. The “Instant” version, which the only version available for free at Morningstar, does not allow you to save your portfolio X-rays for future sessions.

Asset Allocator (TRP / Morningstar Premium Only)
Asset Allocator “is a quick, simple calculator that shows the probability of achieving an investment goal based on current portfolio value, investment mix, and savings rate.” Fun to play with for a while, but if you aren’t savvy it can create the illusion that the answer to reaching your goals is simply to increase your stock percentage until you get the return you want. Use with caution.

Portfolio Watchlist (TRP / Morningstar)
Portfolio Watchlist “helps you track your investments against pricing and volume targets in a convenient one-page format that’s updated throughout the trading day.” Basically the same as Portfolio Manager above, but you can track a bunch of different model portfolios. This is great for creating a benchmark for your performance, or seeing what would happen if you tweaked something.

IRA Calculator (TRP / Morningstar)
A somewhat basic tool, but still handy. The IRA Calculator has three different sections: Eligibility (determine your contribution limit for a Roth or Traditional IRA), Comparison (compare various scenarios to find out which type of IRA works best for you), and Conversion (find out whether it makes sense to convert a Traditional IRA to a Roth IRA).

While on Vanguard’s website I recently ran across a new and useful tool that help helps you calculate and compare costs for similar Vanguard ETFs and mutual funds. The tool takes into account trade commissions, the difference in expense ratio, redemptions fees, future purchases, and even the expected bid-ask spread.

For the unfamiliar, I’ll be very simplistic and say that exchange-traded funds, or ETFs, are mutual funds that can be traded like individual company stocks. Due to the way they are constructed, ETFs tend to have lower expense ratios than their mutual fund counterparts, but you will need to pay a commissions each time you trade. There is also a little bit of added loss due to the bid-ask spread.

For example, you could compare the Vanguard Total Stock Market Index Fund (VTSMX) with the Vanguard Total Market ETF (VTI). Both invest in the exact same set of companies, and holds over 1,000 companies that track closely the entire U.S. market. VTSMX charges an annual expense ratio of 0.19%, or $19 on a $10,000 investment. VTI has an expense ratio of only 0.07%, a mere $7 for each $10,000 invested.

I tried an example where I start with $10,000 of either VTSMX or VTI, and say that I will add another $1,200 each quarter for another 10 years. I assumed $5 trade commission and a 8% annual return. Here are the results:

(fixed the numbers :P) The cost edge goes to the ETF in this case, with a cost difference of $300. Really, I don’t see that as all that much over 10 years. But, as you get into larger amounts, the gap widens. If you continued the same example for another 20 years, the ETF’s cost advantage would be $7,000.

For this reason, I feel like it is only a matter of time before I start moving all of my current all-mutual fund portfolio into ETFs. In fact, the majority of my funds already have an identical ETF counterpart.

Anyhow, you can play with this calculator and change the variables to see your situation. Note that Admiral shares are an option once you reach $100,000 per fund. I’ve got a while before that…

But in terms of the big picture, both of these funds have very low costs and would serve as a great cornerstone to a retirement portfolio. If you are just starting out, I think you’ll see the difference is very small; I really wouldn’t stress too much about going either way.