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Streamlining Your In-Retirement Portfolio?

Morningstar Investment Research

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June 01, 2012 - Streamlining Your In-Retirement Portfolio? You Can Only Take It So Far - by Morningstar Investment Research

Woulda, coulda, shoulda. Those were the words Morningstar director of personal finance Christine Benz pondered as she read the many comments on one of the portfolio makeovers articles that ran on Morningstar.com a few weeks back. Readers criticized the "after" portfolio as being too sprawling for its own good, and she could see that they had a valid point. Benz noted many things that she would do over in the portfolio, but she also pointed out why investors need to understa nd the differences in a portfolio's makeup between the accumulation stage and the in-retirement stage. When you're in the accumulation phase--particularly early on--you can readily get by with fewer investments because you're not close to needing your money. But as retirement draws near, it's no longer workable to think of the retirement portfolio as a single entity. That's because each of those distinct kitties in your total portfolio has its own liquidation schedule.

Most Ratings Useful for Fund Investors, Too

I enjoy using Morningstar's moat ratings to learn whether an individual stock has advantages over its competitors. But is there a way I can gain access to moat rating information for my mutual funds?

Morningstar assistant site editor Adam Zoll recently answered this question, stating that for the uninitiated, a company's "economic moat" refers to the degree t o which it has sustainable competitive advantages within its industry. Sustainable advantages can take several different forms. One source of an economic moat would be a patent that prevents competitors from offering a viable alternative product. Another type of economic moat is what's called the network effect, which essentially means the value of the service grows for all as more people use it. Morningstar's equity analyst team assigns one of three economic moat ratings--wide, narrow, or none--to each stock it covers. But things get a little more complicated when determining how the moat rating applies to mutual funds.

Among the other topics we addressed this week:

Breaking Up Is Hard to Do: Why You Should Use a Divorce Financial Planner. A planner who specializes in ma rital dissolution can help you focus on the long-range financial implications of a divorce settlement.

A Low-Cost Core Building Block ETF. While it may seem boring, slow and steady wins the race, as evidenced by this fund's 4-star status.

Vanguard Reduces Fees--Again. Plus, study looks at alternative investments usage and more.

Vanguard Municipal-Bond Funds Try to Up Their Game. The firm has invested in personnel and tools in an attempt to add more value before costs.

Can Fidelity Build a Better Value Shop? Better known for a sprawling suite of growth funds, Fidelit y finally adds muscle to its value lineup.

Afraid of Bears? These Funds Keep an Eye on the Downside. For those afraid the market will take a turn for the worse, we offer a selection of Gold- and Silver-rated stock funds that have beaten their peers during downturns.

What the Option Market Is Really Saying About Facebook's Future. Volume statistics and put/call ratios tell us very little, but option prices do contain a glimpse into what the market expects in the future.

Selling Puts in a Nutshell. You need only two basic ingredients for this option recipe: overvalued volatility and undervalued equity.

Implications of Weakening Chinese Commodity Demand. Several commodities may lose a long-standing structural demand driver in China's economic shift.

The Chinese Oil Dynasty. Upstream beats downstream when the government sets quotas and prices.

Are We Just Whistling Past the Graveyard? Investors in the corporate credit markets are trying their best to remain cheerful under difficult circumstances.

Use This Fund to Hedge Against a Greek Exit. This leveraged municipal fund stands to gain from a risk-off environment.

ProShares Rolls Out Covered Bond ETF. AdvisorShares debuts sustainable-themed ETF, and UBS launches two leveraged payout ETNs. Plus, the week's best- and worst-performing ETFs.

Lessons From Facebook's IPO. The social network's bumpy first week highlights the dangers of investing in buzz.

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