LikeAssets Review: A Reality Check For Your Portfolio

Over the years, I’ve noticed that people tend to overestimate their own stock-picking prowess – myself included. Especially over longer periods of time, if you’re not tracking things carefully you probably don’t know how well you’re doing on a relative basis. We all tend to remember the winners and forget the losers. The sooner you figure out you’re not Buffett, the sooner you can improve your returns. (Otherwise, the sooner you can start your own hedge fund.)

If you like the idea of my Beat The Market Experiment but don’t want to expend too much effort in tracking your own performance, you should check out LikeAssets.com. This new portfolio tracking site recently became the backend for the Wall Street Journal’s Portfolio tool (paid subscribers only), but the direct site is free to all. I’ve been playing around with it for a few days, and here’s my review.

LikeAssets is similar to a Mint.com, SigFig, or Personal Capital (review) in that you hand over your login information and they automatically sync with your brokerage accounts to pull in your holdings. However, their key differentiator is that they automatically choose the appropriate benchmark ETFs based on your holdings in order to determine your “alpha” (excess return above benchmark). You don’t have to do anything. So if you’re holding a bunch of big dividend-paying companies, you’ll probably be matched up with a large-cap value index ETF. The custom benchmark goes even further to match your trades in real-time, not just your current asset allocation:

How is the LikeAssets custom benchmark calculated?
A benchmark portfolio is constructed based on the types of securities in your portfolio. When you make a trade, your custom benchmark portfolio mirrors the trade using an appropriate ETF or set of ETFs.

Once you sign up, you can either choose to import your data electronically from a supported brokerage firm, or manually input your trades. Supported firms include Fidelity, Vanguard, TD Ameritrade, Schwab, E-Trade, Scottrade, and OptionsXpress. Below is a screenshot of my linked TD Ameritrade benchmark portfolio. I would expect my “alpha” here to be close to zero as they are already passive investments, and that is indeed the case.

(click to enlarge)

Unfortunately LikeAssets only works with about 50 brokers right now, and my TradeKing speculative portfolio is currently not supported. Typing in the trades manually is somewhat of a pain as you’d expect, although the software does automatically fill in your buy/sell price based on the market’s closing price that day (not exact, but a good estimate and you can edit it). In addition, dividend distributions are automatically calculated for you (any reinvestment of dividends still must be input manually). Here’s a screenshot of my manually-input TradeKing account:

(click to enlarge)

I couldn’t figure out how to account for my cash holdings, so I left that out. My “alpha” is a sad -20%.

It would be nice if they simply showed my what my custom benchmark actually is, but you can figure it out by looking at the “Asset Classification” breakdown and this list of representative ETFs taken from their blog:

U.S. Large Cap Growth – iShares Russell 1000 Growth Index (IWF)
U.S. Large Cap Value – iShares Russell 1000 Value Index (IWD)
U.S. Small Cap Growth – iShares Russell 2000 Growth Index Fund (IWO)
U.S. Small Cap Value – iShares Russell 2000 Value Index Fund (IWN)
U.S. Real Estate – Vanguard REIT ETF (VNQ)
U.S. Bonds – iShares Barclays Aggregate Bond (AGG)
U.S. Treasury Inflation Protected Securities – iShares Barclays TIPS Bond (TIP)
U.S. Municipal Bonds – SPDR Barclays Municipal Bond ETF (TFI)
U.S. High Yield Bonds – PowerShares High Yield Corporate Bond (PHB)
International Developed Equity – iShares MSCI EAFE Index (EFA)
International Developed Bonds – SPDR Barclays Capital Intl Treasury Bond (BWX)
Emerging Markets Equity – Vanguard Emerging Markets ETF (VWO)
Commodities – iShares S&P GSCI Commodities Indexed ETF (GSG)
Emerging Markets Debt – PowerShares Emerging Markets Sovereigns ETF (PCY)
U.S. Dollars – SPDR Barclays Capital 1-3 Month T-Bill (BIL)

All in all, I think LikeAssets is a quick and simple tool to help you figure out how well you’re doing relative to the market. It doesn’t give you stock tips, alternative mutual fund recommendations, or get you to switch brokers. I do wish it supported more brokers, but hopefully that will come with time.