Working with Custom Benchmarks and Model PortfoliosOﬃce Working with Custom Benchmarks and Model Portfolios Morningstar Office Cloud

Working with Custom Benchmarks and Model Portfolios

Morningstar Office Cloud

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Copyright © 2020 Morningstar, Inc. All rights reserved.

The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; (3) is not warranted to be accurate, complete or timely; and (4) does not constitute advice of any kind. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Any statements that are nonfactual in nature constitute opinions only, are subject to change without notice, and may not be consistent across Morningstar. Past performance is no guarantee of future results.

Morningstar Office Cloud April 2020© 2020 Morningstar. All Rights Reserved.

Morningstar Office Cloud April 2020 3© 2020 Morningstar. All Rights Reserved.

Contents

Creating Custom Benchmarks and Model Portfolios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5What is the difference between a model portfolio and a custom benchmark?. . . . . . . . . 5Exercise 1: Create a custom benchmark. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Exercise 2: Create a model portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Where do I locate custom benchmarks and model portfolios? . . . . . . . . . . . . . . . . . . . . . 10How do I edit a Model Portfolio? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Analyzing Custom Benchmarks and Model Portfolios using the Analytical View . . . . . . . . . . 12

What functionality is available within the Model Portfolio analytical view? . . . . . . . . . . 12Exercise 3: Assign a custom benchmark to a component . . . . . . . . . . . . . . . . . . . . . . . . 13Exercise 4: Create a custom tab . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Exercise 5: Run an analytical report for a model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18How do I view notes within the Model Portfolio Analytical View? . . . . . . . . . . . . . . . . . . 20Exercise 6: Save a Model Portfolio analytical view . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Managing Morningstar tRx Models in Morningstar Office Cloud . . . . . . . . . . . . . . . . . . . . . . 22

How do I sync models created in Morningstar tRx with Morningstar Office Cloud? . . . . 22Where do I find synced models within Morningstar Office Cloud?. . . . . . . . . . . . . . . . . . 24How do I use Morningstar tRx models with Presentation Studio? . . . . . . . . . . . . . . . . . . 26

Working with Custom Benchmarks and Model Portfolios

OverviewCustom benchmarks and model portfolios are tools you create to help better manage your clients and accounts. Once created, model portfolios and custom benchmarks are managed within the Workspace area.

Models can be viewed within a Models Grid and Analytical View. The Models Analytical View is a series of tabs, which contains charts and tables. Charts and tables can be customized to include custom benchmarks which are used to compare your line up with similar line ups within the marketplace.

This manual describes the following topics:

gCreating Custom Benchmarks and Model Portfolios (page 5)gAnalyzing Custom Benchmarks and Model Portfolios using the Analytical View

(page 12)gManaging Morningstar tRx Models in Morningstar Office Cloud (page 22)


Creating Custom Benchmarks and Model Portfolios Overview

Creating Custom Benchmarks and Model Portfolios

OverviewCustom benchmarks and model portfolios help you construct client accounts and portfolios that align to a specific strategy and are competitive in the marketplace.

In this section, you will learn how to do the following:

g recognize the difference between a model portfolio and a custom benchmark (page 5)

g create a custom benchmark (page 6), andg create a model portfolio (page 7).

What is the difference between a model portfolio and a custom benchmark?

In Morningstar Office Cloud, custom benchmarks and model portfolios are similar in structure, however, each serves its own unique purpose. The table below describes the purpose of each tool and how it is constructed:

Use this… For this purpose… With these holdings…

Custom Benchmark

A benchmark is used as a comparison mechanism to ensure that your clients’ accounts and portfolios are performing in lock-step with the market.

Create multiple custom benchmarks to ensure that you are making apples-to-apples comparisons against your clients’ accounts.

Blend multiple indexes together to create a benchmark that mirrors the investments in your clients’ accounts.

Model portfolio A model portfolio is a portfolio comprised of your preferred holdings, designed to show the strategy you are proposing for your clients.

Create multiple models or strategies to align with the goals and objectives of individual clients.

Select preferred holdings in specific asset classes to design specific strategies.


Creating Custom Benchmarks and Model Portfolios Exercise 1: Create a custom benchmark

Exercise 1: Create a custom benchmark

Before creating a custom benchmark, be sure to select the indices you want to blend. You can either create or import an investment list containing the indexes, or you can manually select each index to include.

In this exercise, you will manually select each index.

To create a custom benchmark, do the following:

1. On the header, click the Create icon, then select Custom Benchmark. The Create a Custom Benchmark box opens.

2. In the Custom Benchmark Name field, type Moderate. Then click Next. The Creating Moderate box opens.

3. Click the Add Holdings button. The Add Holdings menu opens.

4. In the Type to Search field, type Morningstar US Market TR USD.

5. From the Morningstar Securities area, select the matching item.

Select this

Type a name for your custom benchmark here.

Select the US dollar option.


Creating Custom Benchmarks and Model Portfolios Exercise 2: Create a model portfolio

6. In the Type to Search field, type Morningstar US Core Bd TR USD.

7. From the Morningstar Securities area, select the matching item. Click off the Add Holdings menu to close.

8. In the Weight % column, enter the following percentages:

9. At the top of the window, click Calculate. The allocation totals update.

10. Click Save.

Exercise 2: Create a model portfolio

As with the process for creating a custom benchmark, be sure to select the preferred holdings to include before creating a model portfolio. Again, you can either create or import an investment list containing your preferred investments, or you can select each investment individually.

Before completing this exercise, create an investment list named Preferred Investments. Click here to access a Microsoft Excel file containing investments to include in your list.

Note: For instruction on importing a list, click here.

To create a model portfolio, do the following:

1. On the header, click the Create icon, then select Model Portfolio. Create a Model Portfolio box opens.

Index Weight

Morningstar US Market TR USD 60

Morningstar US Core Bd TR USD 40

Enter weight percentages, then click here.

Select this option.


http://advisor.morningstar.com/AWSOE/Training/IACloud/PreferredInvestments.xlsx

https://advisor.morningstar.com/AWSOE/Training/IACloud/Importing.pdf


2. In the Model Portfolio Name field, type Preferred Investments. Then click Next. The Creating: Preferred Investments box opens.

3. Click the Add Holdings button. The Add Holdings menu opens.

4. Select From Investment List. The Investment List menu opens.

5. Select Preferred Investments. The Preferred Investments menu opens.

Type the name of your Model here.

Click the + icon, then select this option.

Select this list.



6. From the top of the Preferred Investments menu, select + Add All 5 Investments. The investments are added. Click off the Add Holdings menu to close

7. To close the Preferred Investments menu, click outside it.

8. In the Weight column, add the following percentages:

9. At the top of the window, click Calculate. The allocation totals update.

10. Click Save.

Index Weight

BlackRock US Mortgage Portfolio Instl 20

FMI International 10

Jensen Quality Growth J 30

Parnassus Mid-Cap 20

Virtus KAR Small-Cap Core I 20

Click here to add securities from your list.

Enter weight percentages, then click here.


Creating Custom Benchmarks and Model Portfolios Where do I locate custom benchmarks and model portfolios?

Where do I locate custom benchmarks and model portfolios?

Once created, you can locate Model Portfolios and Custom Benchmarks within the Menu under Workspace.

How do I edit a Model Portfolio?

To edit a model portfolio, do the following:

1. From the Menu, select Workspace > Models. The Model Portfolios page opens.

2. Hover the cursor over the model you want to edit, then select the Action drop-down menu.

View Model Portfolios and Custom Benchmarks you create within these pages.

Click here to start.


Creating Custom Benchmarks and Model Portfolios How do I edit a Model Portfolio?

3. From the Model Portfolios drop-down menu, select Edit. A window opens.

4. Add or remove investments, or change allocation.

Note: Repeat these steps to edit a Custom Benchmark.

5. Click Save.

Select this option.

Add investments here

Change allocation here

To remove an investment, check its box, then click Delete


Analyzing Custom Benchmarks and Model Portfolios using the Analytical View Overview

Analyzing Custom Benchmarks and Model Portfolios using the Analytical View

OverviewOnce created, analyze your custom benchmarks and model portfolios within the Models Analytical View. Here, you can review performance, asset allocation, risk and more for each model portfolio to ensure that your recommended strategies meet your clients’ needs. You can also apply a custom benchmark to charts and graphs to compare your model portfolio with market conditions.

In this section, you will learn how to do the following:

g recognizing functionality within the Model Portfolio Analytical View(page 12). g assigning a custom benchmark to a chart or table(page 13)g customizing a tab (page 15)g running a report for a model portfolio (page 18)g adding notes, and (page 20)g saving a custom Analytical View. (page 21)

What functionality is available within the Model Portfolio analytical view?

The Model Portfolio area contains a list of your model portfolios, along with an Analytical View fly-in panel that contain charts and tables that help you analyze your models. You can customize tabs, or create your own tabs from scratch using the Edit panel.

Click here to access the Component Library

Click to activate the model you want to analyze

Click on any tab to view components

Click this icon to create a custom tab.


Analyzing Custom Benchmarks and Model Portfolios using the Analytical View Exercise 3: Assign a custom benchmark to a component

You can also edit existing model portfolios, create new model portfolios and export models, directly from the Grid.

Exercise 3: Assign a custom benchmark to a component

Assigning custom benchmarks to charts and tables helps to ensure that the investment lineup within the model remains competitive against the marketplace. In this exercise, you will assign the custom benchmark you created in Exercise 1 to the Historical Returns chart.


Click here to create models.

Click here to here to edit an existing model

Click here to start


Analyzing Custom Benchmarks and Model Portfolios using the Analytical View Exercise 3: Assign a custom benchmark to a component

2. Click on a model. The Model Portfolio analytical view opens.

3. From the analytical view, select the Performance tab.

4. In the header of the Historical Return Monthly chart, click the Settings icon. The Component Settings menu opens.

5. From the Settings menu, select Benchmark. The Benchmark menu opens.

Click on any model.

Click this tab.

Click this option.


Analyzing Custom Benchmarks and Model Portfolios using the Analytical View Exercise 4: Create a custom tab

6. Select User Created. The User Created menu opens.

7. Select Custom Benchmarks. The Custom Benchmarks menu opens.

8. Select the Moderate benchmark.

9. Click away from the Component Settings menu to close it. The benchmark used in the component will change the custom benchmark you selected. Remain on the Performance tab.

Exercise 4: Create a custom tab

In addition to comparing your model portfolio against a custom benchmark, you may want to customize a tab to compare different time frames. In this exercise, you will add a second Historical Returns component to the Performance tab to compare returns at different frequencies. To add a component to a tab, do the following:

1. From the right side of the screen, click Edit. The Edit panel opens.

Select this benchmark.

Hover the cursor over a bar to view return numbers

Click here to edit the tab



2. Click the X in the top right corner of the Cumulative Return component to remove it.

3. Click and drag the Historical Return component to the bottom of the screen.

4. Click Done to close the Edit panel.

5. On the right side of the top Historical Return component, click the Settings icon. The Settings menu opens.

6. Click Frequency.

Click and drag the component here

Click this option.



7. Click on the Frequency option, then select Quarterly.

8. Click away from the Component Settings menu to close it. The Frequency changes to Quarterly.

Click this option.

Note that you can now compare returns with different frequencies


Analyzing Custom Benchmarks and Model Portfolios using the Analytical View Exercise 5: Run an analytical report for a model

Exercise 5: Run an analytical report for a model

Three analytical reports are available to be run with model portfolios. The following table describes each report:

Run these reports with model portfolios to analyze a strategy, and help your clients understand the strategy you are recommending for them. To run an analytical report, do the following:

1. On the Model Portfolio grid, hover the cursor over the Preferred Investments row. The Action icon appears.

2. From the Action drop-down menu, select Generate report... The Generate Report dialog box opens.

Report Description

Account Overview A one-page report that provides analytical, performance and holding data.

Morningstar Snapshot The full range of portfolio analytics, including Morningstar proprietary metrics

Morningstar X-Ray Aggregated composition and performance data for all the holdings in a portfolio

Select this option.


Analyzing Custom Benchmarks and Model Portfolios using the Analytical View Exercise 5: Run an analytical report for a model

3. From the Select a Template drop-down menu, select any report.

4. Select the Report Settings you want to include.

5. Click Run. The report opens in a new tab when it is ready.

Choose from these setting options

Choose a report here


Analyzing Custom Benchmarks and Model Portfolios using the Analytical View How do I view notes within the Model Portfolio Analytical View?

How do I view notes within the Model Portfolio Analytical View?

You can view notes relating to model portfolios or a security within a model portfolio within the Model Portfolio analytical view. To view notes, you must add the Notes component to an existing tab or a custom tab.

To view notes within the Model Portfolios Analytical View, do the following:

1. From the Analytical View header, click Edit. The Edit panel opens.

2. Drag and drop Notes into any standard or custom tab.

3. Click Done. Notes related to the highlighted model are visible.

Click this button

Drag and drop this component.

View notes relating to highlighted model here.


Analyzing Custom Benchmarks and Model Portfolios using the Analytical View Exercise 6: Save a Model Portfolio analytical view

Exercise 6: Save a Model Portfolio analytical view

Now that you’ve customized your Model Portfolios analytical view, save it to retain the changes that you’ve made. To save changes to a Model Portfolio analytical view, do the following:

1. On the header, click the Model Portfolios drop-down menu, then select Save As. A box opens.

2. In the text box, type My Model Portfolio.

3. Click Save. A confirmation message appears.

Click this option.

Type the name of your new workbook here


Managing Morningstar tRx Models in Morningstar Office Cloud Overview

Managing Morningstar tRx Models in Morningstar Office Cloud

OverviewWhen you subscribe to Morningstar Office Suite, you also subscribe to Morningstar Total Rebalance Expert (tRx), Morningstar’s rebalancing solution. Morningstar tRx provides comprehensive portfolio monitoring and rebalancing at the household or account level.

Models created within Morningstar tRx can be synced with Morningstar Office Cloud, allowing you to take advantage of the same features available for models you create within Morningstar Office Cloud. These features include analyzing models usian and analytical view, assigning models to clients and accounts, using models within presentation studio, and more.

In this section, you will learn how to do the following;

gSyncing models created in Morningstar tRx with Morningstar Office Cloud (page 22)

gViewing Morningstar tRx models within Morningstar Office Cloud, (page 24) and gUsing Morningstar tRx models within Presentation Studio (page 26).

How do I sync models created in Morningstar tRx with Morningstar Office Cloud?

Before syncing models with Morningstar Office Cloud, you must first create them within Morningstar tRx.

Note: For more information about Morningstar tRX or assistance in build models within Morningstar tRx, contact your Customer Success Manager.

Once created, do the following;

1. Login to trx.morningstar.com and enter your Morningstar tRx username and password, then click Sign In. Morningstar tRx opens.

Enter your Morningstar tRx credentials here.


Managing Morningstar tRx Models in Morningstar Office CloudHow do I sync models created in Morningstar tRx with Morningstar Office

Cloud?

2. From the Menu, click Investment Modeling > My Models. The My Models page opens.

3. From the toolbar, click the Sync models to Office Cloud button.

Once complete, validate that your models have synced successfully within the My Models grid view.

Click this button.

Review this column.


Managing Morningstar tRx Models in Morningstar Office Cloud Where do I find synced models within Morningstar Office Cloud?

Where do I find synced models within Morningstar Office Cloud?

Once your sync is successful, your models are available from the Model Portfolios page within Morningstar Office Cloud. From here, you can view and analyze your tRx models. Do the following;

1. Login to office.morningstar.com and enter your Morningstar Office Cloud username and password.


Enter your Morningstar Office Cloud credentials here.

Click here to start


Managing Morningstar tRx Models in Morningstar Office Cloud Where do I find synced models within Morningstar Office Cloud?

3. From the Model Portfolio Grid, click on the Morningstar tRx model you want to view. The Model Portfolios workbook opens.

Note: Morningstar tRx models are Read Only files, so you are unable to edit them in Morningstar Office Cloud.

4. Use charts and tables to analyze the model.

Click directly on the model to view

Note the type of model you are viewing here.

Use these tabs to analyze tRx models.


Managing Morningstar tRx Models in Morningstar Office Cloud How do I use Morningstar tRx models with Presentation Studio?

How do I use Morningstar tRx models with Presentation Studio?

Presentation Studio is a custom report builder where you can create performance reporting templates for your clients. As part of your Presentation Studio build, you can assign models to compare against your clients’ accounts, including Morningstar tRx models synced with Office Cloud.

Note: Click here for instructions on using Presentation Studio.

When selecting your settings for a new or existing Presentation Studio template, you have the option to select a model. You can choose from either a model created in Morningstar Office Cloud or in Morningstar tRx.

Select a Morningstar tRx model here.


https://advisor.morningstar.com/AWSOE/Training/IACloud/Presentation-Studio-Introduction.pdf

Documents

Working with Custom Benchmarks and Model PortfoliosOﬃce Working with Custom Benchmarks and Model Portfolios Morningstar Office Cloud