As buy-side
analysts piece
together
work
in
research,
data,
and
portfolio-construction
platforms,
clunky
tools
slow
down
the
process.
Disconnected
platforms
drag
out
evaluation
and
conceal
potential
opportunities.
With
more
efficient portfolio
risk
analytics,
you
can
save
time
and
test
your
hypotheses
faster.
Quickly
peel
apart
the
holdings
in
managed
investments,
models,
ETFs,
custom
benchmarks,
and
client
portfolios
to
see
what’s
below
the
surface.
Here’s
how.
Categories
of
Risk
Exposures
The
return
premia
of
factors
like
investment
style
or
sectors
shift
with
the
markets.
But
advisers
can
prepare
portfolios
for
market
moves
by
making
informed
decisions
across
the
portfolio.
Look-through
analysis
can
expose
concentrated
portfolio
exposure
to
factors
that
make
you
vulnerable
to
certain
market
conditions.
Morningstar’s
new
Direct
Lens
interface
makes
it
easier
to
roll
up
data
across
the
portfolio
and
test
how
changing
an
investment
or
weighting
would
affect
the
overall
portfolio.
Delve
into
a
range
of
key
factors,
explained
below.
Sector
Exposure
Detailed,
specific
analysis
of
sector
exposure
can
help
analysts
understand
the
risk
sources
in
their
portfolio
and
what
levers
to
pull
in
market
headwinds.
In
the
last
year, cyclical
and
sensitive
sectors have
staged
a
resurgence
thanks
to
excitement
about
artificial
intelligence
(AI)
and
a
more
stable
US
economy.
With
a
190%
return
in
the
first
half
of
2023,
Nvidia
(NVDA)
became
the
poster
child
for
the
tech
sector
and
its
continued
double-digit
gains.
Meanwhile,
consumer
defensive
and
basic
materials
sectors
stumbled.
The
energy
sector
also
slumped
in
the
second
quarter
stemming
from
the
reverberations
of
declining
oil
prices.
Have
sector
trends
tipped
the
balance
of
your
asset
allocation?
Portfolio
risk
analytics
can
reveal
rebalancing
opportunities.
Currency
Exposure
After
pulling
even
with
the
Euro
in
2022,
the
US
dollar
weakened
in
2023.
Foreign
equity
returns
benefited,
as
developed
European
markets posted
2.66%
gains in
the
second
quarter
of
2023
and
23.42%
gains
over
the
trailing
year.
How
did
fluctuating
exchange
rates
affect
your
investments?
At
the
portfolio
level,
you
can
see
how
currency
hedges
and
exposures
to
foreign
markets
influenced
returns.
Interest
rate
exposure
Bonds
are
particularly
sensitive
to
shifts
in
interest
rates.
When
interest
rates
rise,
bond
prices
generally
fall,
leading
to
potential
losses
for
bondholders.
But
after
a
choppy
first
quarter,
the
second
quarter
of
2023
proved
to be
less
volatile
for
interest
rates and
credit
markets.
Use
look-through
analysis
to
see
how
holdings
contributed
to
overall
interest-rate
exposure
and
how
trimming
positions
could
affect
returns.
Liquidity
Exposure
Portfolios
heavy
in
hedge
funds,
options
contracts,
stock
futures,
and
other
illiquid
assets
make
it
difficult
to
sell
assets
on
short
notice
for
a
reasonable
price.
In
the
second
quarter
of
2023,
liquidity
proved
to
be
a favourable
return
factor.
What
overall
risk
does
this
pose
for
your
portfolio?
With
efficient
portfolio
analysis
tools,
you
can
efficiently
sum
up
and
present
your
findings
to
your
investment
team.
International
Exposure
International
diversification
doesn’t
always
reduce
risk,
especially
if
it
means
investing
in
the
same
style
or
sector. Risk
modeling
helps
you
understand
the
real-time
return
premia
associated
with
investment
risk
factors.
After
a
so-so
finish
in
Q1,
Emerging Latin
America
paced
all
regions in
the
second
quarter.
Brazil’s
farm
sector
surged,
and
soybean
sales
are
expected
to
reach
record
numbers
in
2023.
Mexico’s
economy
also
boomed,
propelled
by
the
service
sector’s
expansion.
In
Direct
Lens,
analysts
can
quickly
see
how
a
portfolio
(or
a
specific
fund)
invests
in
Latin
America
and
regions
across
the
globe.
Analyse
as
You
Construct
with
Direct
Lens
The
Morningstar
Direct
Lens
interface
makes
it
easy
to build,
edit,
and
analyse
portfolios.
In
one
place,
you
can
look
through
individual
holdings
and
roll
up
exposure
across
the
portfolio.
Fine-tune
asset
allocations,
sector
exposure,
and
style-box
positioning
to
bring
your
investment
vision
to
life.
The
new
tool
combines
attribution
with
the
deep,
broad funds
and
competitive
analysis
data you
trust
from
Morningstar.
See
it
for
yourself
with
a 20-minute
demo.
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