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Morningstar may have some competition in the marketplace for evaluating mutual funds. Putnam Investments rolls out its new FundVisualizer today, an open-architecture tool that allows advisors to research and compare over 10,000 mutual fund and ETF offerings through a web-based interface. (ETFs will be added to the tool in two weeks). Three advisors interviewed by Registered Rep. found the tool to be very simple and easy to use.
â€śIt makes my life easier when Iâ€™m going to compare,â€ť said Trenton Siskron, a financial advisor with Morgan Stanley Smith Barney in Houston. â€śWe all have limited time throughout the day.â€ť
Siskron said he was able to put the tool to use the first day he was introduced to it. A client called him up asking for a very conservative mutual fund with specific risk characteristics. Using the tool, he found a fund that fit with what the client wanted; he made his recommendation and then submitted a purchase order for the investment, in the same day.
John Reamer, an advisor with Ameriprise (NYSE: AMP) in New Brighton, Minn., said he currently uses Morningstar to compare funds, but â€śthis one was in a very simple form.â€ť When you pull up the FundVisualizer interface, you enter the ticker symbols of the funds you wish to compare, and the tool creates different charts and graphs based on what you want to see. Itâ€™s pretty clear, and you donâ€™t have to page through reams of data, Reamer said.
â€śYou canâ€™t possibly sift through all of those in a comprehensive fashion while dealing with a client on a day-to-day basis.â€ť
It can also help clients understand why an advisor recommended one fund over another, Reamer said. The amount of information that clients ask for is pretty wide and varied, and this tool helps advisors to pull up information within two to three minutes.
Siskron said he could use Putnamâ€™s tool rather than Morningstarâ€™s because he feels you can do the comparisons much more quickly and easily with Putnamâ€™s tool.
The new tool is free to registered representatives, and Putnam hopes it will catch on with smaller broker/dealers, banks and registered investment advisors that have had to pay for these types of tools in the past, said Brian Kelley, managing director at Putnam.
Shawn McLaughlin, president and CEO of McLaughlin Ryder Investments in Alexandria, Va., said similar software existsâ€”from Morningstarâ€™s and Thomson Reutersâ€”but you have to pay for them. He expects to still use Morningstarâ€™s system, but if he can have the same tool for free, he may spend that money in other places. He expects the Putnam tool will help advisors cut costs.
Bring It On
Advisors also have the ability to analyze any fund in the fund universe, not just Putnamâ€™s. Putnamâ€™s Kelley said this is part of Putnamâ€™s â€śBring it onâ€ť culture, brought to the firm by President and CEO Bob Reynolds, who joined in July 2008. Reynolds set the bar high on performance, and the firm wants advisors to see how other funds stack up.
â€śTheyâ€™re doing this at the risk that the Putnam fund Iâ€™m considering looks less appealing than the competition,â€ť said McLaughlin. â€śI give them credit for that. That will come back to Putnam in one way or another.â€ť
Others Out There
Other fund companies, including American Funds and Pimco, do offer similar fund comparison sites, but these tools can only evaluate their own proprietary funds. And the way that advisors manage a portfolio has changed in the last decade, in that they used to go to one fund family and diversify a portfolio that way, Kelley said. These days, theyâ€™re not limiting themselves in that way; advisors are being more tactical and want more choice.
iShares is one other fund company that provides a similar tool for advisors, and it does display non-proprietary funds as well, said Lauren Wistrom, senior analyst with Corporate Insight. The tool, which also includes mutual funds and ETFs, also provides the user with more options in its screening capabilities. For instance, you can screen by region, sector or style, and there are other sub-options, Wistrom said.
Both the Putnam and iShares programs are flash-based, but iShares does not give you different options for viewing the data. With the FundVisualizer, you can view the data in a bar graph, line graph, X/Y chart, and in raw numbers, among others. With Putnamâ€™s tool, you can also change the way the chart looks as you go along, something the iShares system cannot do.
â€śIn that sense, (Putnamâ€™s) is a little more user-friendly,â€ť Wistrom said.
Morningstarâ€™s system is more flat and one-dimensional, while this tool is a little more fun to use, said Wistrom. Either of these toolsâ€”Putnamâ€™s or iSharesâ€™â€”would be preferable to use because of their ease of use, she said.
Putnam has had a fair number of requests from advisors for an iPad version, which Putnam is currently using with its wholesalers in the field. Kelley said the company is evaluating the opportunity to roll it out to advisors, but it wonâ€™t happen in the next few months.