Often recommended limit of 5% applies to individual stocks to reduce company specific risks. So, people holding only stocks (i.e. no funds) should have a portfolio of 20+ stocks.
Must funds are diversified, so they can be held at much higher levels. May be limit the sector funds to 5-10%.

@yogibearbull what higher levels do you have in mind for diversified mutual funds?

I posted on it a few days ago and highlighted,
"Morningstar's John Rekenthaler starts with a simple but unusual observation that if 2 assets have the same long-term (LT) TR, then rebalancing will definitely benefit the TR."
In all other cases, rebalancing hurts TR, but does control risk.
https://www.mutualfundobserver.com/discuss/discussion/62512/m-jr-on-rebalancing#latest"

Often recommended limit of 5% applies to individual stocks to reduce company specific risks. So, people holding only stocks (i.e. no funds) should have a portfolio of 20+ stocks.
Must funds are diversified, so they can be held at much higher levels. May be limit the sector funds to 5-10%.

Excellent @msf. Thank you. And @MikeM - “I approve of this message.” :)
The 4 fund portfolio @msf outlines seems workable. With the current 10% cash and 10% short-term bond positions, I’m already close to the hypothetical 25% cash his model suggests. I oversimplified the long bond position. It’s actually a corporate BBB grade CEF with 25% leverage. A bit of a “hot dog” that could possibly help offset a severe decline in equities (if accompanied by falling rates).
My commitment to the 2 bond funds is the weakest of the lot. If the CEF does well near term I’d move that into a more stable OEF or ETF of similar duration. I’d sell all / part of the short-term bond fund to add to equities in the event of a market sell-off. Don’t like to speculate on return, but the inherent risks in the portfolio wouldn’t be worth taking if it couldn’t best nominal cash returns by an average of 2 or 3 percentage points longer term.
Thanks for the P/V link. I haven’t played with it yet but surely will.

I put ten funds through Portfolio Visualizer to see how it would optimize such a portfolio.
Some of your categories are easy to understand. Others are not so well defined (and Lipper and M* can differ as well). I took my best shot and picked some suitable (or not so suitable) representatives:
Long/Short: Hull Tactical US HTUS and AQR Long/Short QLENX.
Arbitrage Income: JPMorgan Equity Premium Income JEPAX.
M* calls this "derivative income". Lipper call it "options arbitrage". I don't know whether covered calls were what you had in mind with arbitrage income. Perhaps you were thinking of merger arbitrage, e.g. MERFX. These are "event driven" funds according to both Lipper and M*.
The easy stuff (index funds where possible):
Cash: Blackrock Ultra Short ICSH - Portfolio Visualizer doesn't like to optimize with true cash
Balanced (domestic): Vanguard Balanced Index VBIAX
Balanced (global) : Vanguard Lifestrategy Moderate Growth VSMGX - a fund of index funds, 60/40 domestic/foreign, overlayed on a traditional 60/40 stock/bond allocation
Global Infrastructure: Lazard Global Listed Infrastructure GLIFX
IG Bond (5+ yr): Vanguard Total Bond Index VBTLX
IG Bond (1-3 yr): Vanguard Short-Term Bond Index VBIRX
Risk Premia: Permanent Portfolio PRPFX
I optimized by asking for the greatest annual return that would still allow max drawdown to be kept under 10%.
Anything with bonds drops out. Arbitrage income (at least as I've used it) and infrastructure also drop out. Cash serves as ballast - the lower the desired volatility, the greater the cash allocation. When shooting for a 10% drawdown, cash also drops out - that ballast isn't needed.
In short, with these ten funds as your potential universe, only four funds are needed - the two long/short funds, PRPFX, and cash if ballast is required.
With such a simple portfolio, it's not hard to read the efficient frontier graph in the Portfolio Visualizer output.

• Until you get up to an 11% std dev (i.e. if you want less volatile portfolios), little HTUS is used. Allow more volatility, and the amount of HTUS shoots up quickly.
• The optimal portfolio starts with 100% cash for 0% volatility, and cash decreases along a straight line until the allowed volatility reaches 11%. At that point, the cash allocation is down to zero.
• The other two funds, QLENX and PRPFX together make up the remainder of the portfolio.

Here's the PV link. You can play with it yourself to swap out funds, adjust objectives, etc.
If one wants to maximize Sharpe ratio, one gets a lower return than optimizing for 10% max drawdown. But that comes with much reduced volatility. To achieve this low volatility result, one has to use cash for nearly half the portfolio.

John Rekenthaler articles makes a few important points:

while value and growth stocks might seem the unlikeliest rebalancing opportunity, as they are subsegments of the same investment universe, their fortunes have substantially diverged. In 2022, the Morningstar US Growth Index shed 36.7% of its value, while the US Value index lost less than 1.0%. That was the opportunity that rebalancing seized

At present, do we all have a favorite LCV Fund that we can reallocate LCG outsized gains?

in this universe, as opposed to the alternative world of hypothetical studies, assets don’t regularly record the same long-term returns. Which begs the question: Over that same 9.5-year period, using the same portfolio assumptions, what was the actual benefit of rebalancing?
Not much, as it turns out.

I try to discipline myself to "milk" the cow when I am blessed with a 20% + gain (YTD) in my portfolio...where to put it is the more difficult question.

Swapping between growth and value stocks remained helpful. Otherwise, though, rebalancing reduced the portfolios’ returns.

The rebalanced portfolio may forgo some gains, but it will not surrender its relative safety. Consequently, the risk/return trade-off remains intact. That said, there may, in fact, be a trade-off, rather than an unambiguous benefit. Rebalancing can provide a free lunch—but, as this column has shown, it does not always do so.

when-rebalancing-creates-higher-returns-and-when-it-doesnt?

I have the answer @hank. I just checked my Roth, 401k and T IRA accounts, which I try to manage as one portfolio, and the answer to your question is 15. 16 if you add cash that I group as treasuries, CDs and MM. No more, no less should be used!
I'm being facetious. That just happens to be where I'm at. As you know it is totally up to the individuals comfort level. I try to follow a rule though that says less than 5%, why bother... which I regularly break. But that's just me.

I turn 70 this month, but have heirs in mind. I suppose I'm more aggressive than others would be at my age. Wife is almost 20 years younger. One grown son.
I don't want to add any more positions. Including "cash," I'm already at 11. Market right now is overbought, so I'm growing cash.
I want my funds to give me diversification. More and more, dividends matter to me. I want at least a 3% yield. Some of my stuff offers quite a bit higher yield. My single stocks (there are 4) give me sector exposure:
1) Regional bank. 5.4% of total.
2) Telecom, media. 1.59% of total.
3) oil/gas midstream. 5.49% of total.
4) oil/gas pipe manufacturer. 1.06% of total.
...So, the single stocks are at about 13% of total.
"K.I.S.S." it. After transferring out of BRUFX, we put my wife's IRA $$$ into a conservative allocation fund: WBALX.
In my own IRA, there are 4 funds. Two are junk bonds. I do keep a sharp eye on how they behave, but they both are the most un-volatile holdings I own right now.
There is a tiny amount in the Fallen Angels ETF. FALN.
Cash 4
Domestic stocks 47
Foreign stocks 6
Bonds 40
"other" 3

“To each his own, it’s all unknown.” Bob Dylan. 1970. Hank. You are an experienced investor and your allocation is what’s right for you at this stage of your life. I advise my affluent youngest daughter with her allocation and I always have to remind myself that asset allocation is so different for a 33 year old compared to a 75 year old. she has four funds and so do I but the mix is wildly different. Age matters.

This has been tossed around & debated before. But it’s Sunday and the board is a bit slow. We all learn / evolve as investors. In addition, aging may affect our approach. My approach today is different than 5, 10, 20 years ago. Yours probably is too. About a year ago I simplified things by moving to a 10 fund equally weighted portfolio (with regular rebalancing). I expect it to be diversified enough to experience down years no greater than 7-10% or bear market losses no greater than 20%. It hasn’t yet been tested. I add / reduce risk as desired by swapping out funds. When using individual stocks, 3 combined typically count as one 10% weighting. Right now I’m underweight equities at 37% of portfolio. A more normal weighting would be 40-45%.
- 10% Cash / cash alts
- 10% Balanced (domestic)
- 10% Balanced (global)
- 10% Long-short (fund A)
- 10% Long-short (fund B)
-10% Global infrastructure
- 10% Arbitrage income
- 10% Investment grade bond (5+ year duration)
- 10% Investment grade bond (1-3 year duration)
- 10% Risk premia (PRPFX)
That comes to 10 positions. I can add / reduce risk by exiting one position and substituting a more aggressive or conservative one. The advantage of 10 as I see it is simplicity. I’ve considered cutting back to 8 or even 5. If 8 positions, each would count 12.5%. If 5, each would equal 20%.
PS - Feel free to criticize this. It won’t deter me, but might be enlightening or even amusing. Has anyone tried something similar?

Yes, as a Long/Short Equity Product, VELIX is worth considering. It's a 3.8 year-old fund with only $67M in AUM. Its LT APR is 15.6%. It does well on the downside (202201-202209) beating the SP 500 by 10.4%; however, Immediately afterward (202210-202406), it lagged by -10.8. Versus the SP 500, its 3/yr. performance is -2.1%; its 1/yr is -7.8% ((Source MFO Premium). It's not a GO, which as you may know, has a high bar.) When I wrote the profile, the fund was 80% Long. I'm waiting for a response from the co-manager if that's still accurate. Typically it is long. Attached is the fund's 2Q commentary from Ric Dillon, CIO and CEO. Let me know if you have further questions or concerns.
https://funddocs.filepoint.com/vela/?file=VELA-LargeCap-Commentary.pdf

One important takeaway is that it’s still preferable to roll Roth 401k/403b into Roth IRA.
Levine’s interpretation of an obscure clause is that when beneficiaries are “Designated-Non-Eligible” (a common situation), and death occurred after the RMDs had started, the annual RMD requirement is avoided in Roth IRA (but not when participant held both 401k/403b and Roth 401k/403b); emptying within 10 year is still required.
This complication may be because of the different ways that plans can handle accounting for 401k/403b (distinct vs proportional by contributions).
https://ybbpersonalfinance.proboards.com/post/1559/thread

@fred495 Good morning fred . Look at semi annual report. It's a little dated, but you may find for what your looking for.

Thanks, Dennis, and appreciate the update.
"The fund . . . doesn't have the tech high flyers in it ..of course I don't think you can also say the stocks it holds are low valuation either." On point!
I already assumed they are more likely to sell than to buy. Also, because of the high valuations of the stocks it holds, those holdings could easily see material price drops if the current risk off mood continues. Yesterday, the fund gave up 1.32%. At 25% cash, that is equivalent to a drop of 1.76% in its investments, reflecting the high valuations of its holdings. That is bigger than the drop in any holdings in my portfolio yesterday.
As a concentrated portfolio (18 stocks), I just hope they do not buy / hold anything going forward that can get into political cross hairs / pronouncements. That is the part that makes me nervous going forward and why I am reducing / eliminating individual stocks in my portfolio.

19 July, 2024:

https://www.sec.gov/Archives/edgar/data/1342947/000121390024062820/ea0209708-01_497.htm
497 1 ea0209708-01_497.htm 497
BBH TRUST
BBH PARTNER FUND – SMALL CAP EQUITY
(BBHSX)
SUPPLEMENT DATED JULY 19, 2024 TO THE
PROSPECTUS
AND STATEMENT OF ADDITIONAL INFORMATION
DATED FEBRUARY 28, 2024
The following information supplements, and, to the extent inconsistent therewith, supersedes, certain information in the Prospectus and Statement of Additional Information. Unless otherwise noted, capitalized terms used in this supplement have the same meaning as defined in the Prospectus and Statement of Additional Information.
I. FUND LIQUIDATION
On July 19, 2024, the Board of Trustees of BBH Trust (the “Trust”) approved a Plan of Liquidation for the BBH Partner Fund – Small Cap Equity (the “Fund”) pursuant to which the Fund will be liquidated (the “Liquidation”) on or about the earlier of (i) September 30, 2024 and (ii) the date in which all shareholders have redeemed their respective shares in the Fund (the “Liquidation Date”). Shareholder approval of the Liquidation is not required.
Beginning on July 19, 2024 through the Liquidation Date, the Fund may depart from its stated investment objective and policies as it liquidates holdings in preparation for the distribution of assets to investors. During this time, the Fund may hold more cash or cash equivalents than normal, which may prevent the Fund from meeting its stated investment objective. Shareholders of record as of the close of business on the Liquidation Date will receive their proportionate interest in all of the net assets of the Fund in complete cancellation and redemption of all the outstanding shares of the Fund. Payment will be made in accordance with instructions from each shareholder. If a shareholder has not provided instructions by the time proceeds are distributed, that shareholder’s liquidation proceeds shall be distributed based on the payment instructions on file for such shareholder with the Fund’s Transfer Agent. For those accounts with no bank instructions on file with the Fund’s Transfer Agent, the Transfer Agent shall issue a check. If required by the Internal Revenue Code of 1986, the Fund will make an income distribution prior to the Liquidation Date.
Shareholders of the Fund may redeem their investments as described in the Fund’s Prospectus prior to the Liquidation Date.
If the Fund has not received your redemption request or other instruction by the Liquidation Date, your shares will be redeemed on the Liquidation Date, and you will receive your proceeds from the Fund, subject to any required withholding.
The Adviser will bear all expenses of the Liquidation to the extent such expenses are not part of the Fund’s normal and customary fees and operating expenses. However, the Fund and its shareholders will bear transaction costs and any potential tax consequences associated with turnover of the Fund’s portfolio.
The liquidation of the Fund, like any redemption of Fund shares, will constitute an event upon which a gain or loss may be recognized for state and federal income tax purposes, depending on the type of account and the adjusted cost basis of the investor’s shares. The tax year for the Fund will end on the Liquidation Date. Please contact your tax advisor to discuss the tax consequences to you of the liquidation.
II. CLOSURE OF THE FUND TO PURCHASES
Effective as of the close of business on July 19, 2024, the Fund will be closed to purchases of Fund shares, however, the Fund’s closure to purchases of Fund shares does not restrict any shareholders from redeeming shares of the Fund.
The Fund’s ability to enforce the closure of the Fund to purchases with respect to certain retirement plan accounts and accounts held by financial intermediaries may vary depending on systems capabilities, applicable contractual and legal restrictions and cooperation of those retirement plans and intermediaries.
Please contact the Fund at 1-800-575-1265 if you have any questions.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.

250K was a hypothetical number to illustrate a point. I have Treasuries of varying maturities across multiple accounts -- I dislike having to frequently login to check whether there is idle cash sitting in the account.
I'm not going to share the details of my price arrangement with my RIA. RIA fees per web search can range from 0.25% to 2% but you already know this since you mentioned previously about speaking to many RIA's.

Ok, I got it.
MM pays now 5+% but for years it pays under 1%. A couple of year from now it will be much lower. I can always find pretty good risk/reward bond funds but that's my specialty.
Logins at 4 weeks interval and not interested too much tell me Fidelity is better for you.
How can $250K sit idle? Suppose I sell 1 million and buy $950K(5% less than a million) it's only $50K. To have $250K sitting idle means you sold $5 million. I'm a stickler in that dept, if I see $100 left, I invest it.
Taking care of my money and logging in 10 minutes 2-3 times per week is worth it. I always check all my other financial institution sites too. IMO, It's a must in the digital world to protect and verify your assets.
I only invest in funds/ETFs, very rarely, I trade leveraged CEFs for hours/days when I see a good trade, like 2020, or 2022.
What does someone pay for RIA services?

Just like FAIRX,SGIIX,OAKBX during 2000-10, and later 2010-17 mostly in LC tilting growth, I slowly changed to bonds, by selecting PIMIX as my first bond fund in 2010 and increasing it to over 50%, but I sold in 01/2018 and never looked back.
Then I replaced it with IOFIX for over 50% of my portfolio again. But the world experienced covid and I sold at the end of 02/2020, which is part of my system. I posted about it on the current site (https://www.mutualfundobserver.com/discuss/discussion/55299/bond-mutual-funds-analysis-act-2/p2).
I started buying again at the end of March 2020 and was fully invested by April. But, IOFIX lost it's mojo in 2021 and I discarded it like I did with many others before.
The lesson, I make good money with special bond funds, but I'm very careful and sell immediately when the risk is high; in fact, I sell everything anyway.
I follow this song (https://www.youtube.com/watch?v=7hx4gdlfamo)

@FD1000
We're talking past each other because we don't have the same needs from a brokerage or RIA.
- I'm never 100% in the market so cash earning a competitive rate vs. nothing matters to me.
- I do not have time to login to my Schwab account daily. Sometimes it might easily be 4 weeks between logins. Terrible waste of my time to login daily to prevent opportunity cost of idle cash.
- Lost interest being peanuts. Relative to each individual investor as to what is considered peanuts. For example $250K sitting idle for 4 weeks costs $962 at a rate of 5%. Not a princely sum but no reason for me to pad Schwab's pockets.
- I'm not a fan of layering unnecessary costs(RIA) but in my case I get access to investment instruments that I can't otherwise get without a RIA so cost/benefit to me totally worth it, it isn't even a close call.
- The flat fee advisory model isn't a substitute for what I need from an RIA + most advisors aren't familiar with Alts. The boilerplate allocation stuff can be spit out by a robo advisor, don't need a human for that. Even an occassional subscription to portfoliovisualizer will be cheaper and better than most advisors.
Good luck too on your journey.