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I know this question has been posed before, but how many active funds do you own? What do you feel gives you the diversification you need (without dilution) with the ability to easily monitor them all?
10 active, 1 passive fund. The passive fund is VSCIX, wife's 403b. "...What do you feel gives you the diversification you need (without dilution) with the ability to easily monitor them all?"
Easily monitored, because they are lumped--- most of them--- in just a couple of fund families. I manufacture a composite of them all, and just look-in, each day. Buying or selling is rare. I tend to exchange from A to B in January, after year-end dividends are already paid.
Below explains how I have my family's investments organized along with how I monitor and manage the portfolio.
Sleeve Management System
Now being in retirement here is a brief description of my sleeve system which I organized to help better manage the investments held within mine & my wife’s combined portfolio. Currently, the portfolio is comprised of two taxable accounts, two self directed ira accounts, a health savings account plus two bank accounts. With this I came up with four investment areas. They are a cash area which consist of two sleeves … an investment cash sleeve and a demand cash sleeve. The next area is the income area which consists of two sleeves. … a fixed income sleeve and a hybrid income sleeve. Then there is the growth & income area which has more risk associated with it than the income area and it consist of four sleeves … a global equity sleeve, a global hybrid sleeve, a domestic equity sleeve and a domestic hybrid sleeve. An finally there is the growth area, where the most risk in the portfolio is found and it consist of five sleeves … a global sleeve, a large/mid cap sleeve, a small/mid cap sleeve, a specialty/theme sleeve plus a special investment (spiff) sleeve. Each sleeve (in most cases) consists of three to six funds (some with seven) with the size and the weight of each sleeve can easily be adjusted, from time-to-time, by adjusting the number of funds and amounts held. By using the sleeve system one can get a better picture of their overall investment picture and weightings by sleeve and area. In addition, I have found it beneficial to xray each fund, each sleeve, each investment area, and the portfolio as a whole quarterly. Again, weightings can be adjusted form time-to-time as to how I might be reading the markets and wish to weight accordingly using some adaptive allocation strategies. All funds pay their distributions to the cash area of the portfolio with the exception being those in my health savings accounts where reinvestment occurs. With the other accounts paying to the cash area builds the cash area of the portfolio to meet the portfolio’s monthly cash disbursement amount with the residual being left for new investment opportunity. In addition, most buy/sell trades settle from or to the cash area with some nav exchanges between funds taking place.
Last revised: 09/12/2016 Master Portfolio
Here is how I have my asset allocation broken out in percent ranges, by area. My target allocations are cash 20%, income 30%, growth & income 35%, growth & other assets 15%. I do an Instant Xray analysis on the portfolio quarterly (sometimes monthly) and make asset weighting adjustments as I feel warranted based upon my assessment of the market, my risk tolerance, cash needs, etc. Currently, I am about 25% in the cash area, 25% in the income area, 30% domestic stocks, 15% foreign stocks & 5% in other assets as reflected in a recent Xray analysis. In addition, I have the portfolio set up in Morningstar’s Portfolio Manager by sleeve and as a whole for easy monitoring plus I use the brokerage account statements and reports as well.
Cash Area (Weighting Range 15% to 25% with target being 20%) Demand Cash Sleeve… (Cash Distribution Accrual & Future Investment Accrual) Investment Cash Sleeve … (Savings & Time Deposits)
Income Area (Weighting Range 25% to 35% with target being 30%) Fixed Income Sleeve: FMTNX, GIFAX, LALDX, LBNDX, NEFZX, THIFX & TSIAX Hybrid Income Sleeve: CAPAX, CTFAX, DIFAX, FKINX, ISFAX, JNBAX & PGBAX
Growth & Income Area (Weighting Range 30% to 40% with target being 35%) Global Equity Sleeve: CWGIX, DEQAX & EADIX Global Hybrid Sleeve: BAICX, CAIBX & TIBAX Domestic Equity Sleeve: ANCFX, FDSAX, INUTX, NBHAX, SPQAX & SVAAX Domestic Hybrid Sleeve: ABALX, AMECX, DDIAX, FBLAX, FRINX, HWIAX & LABFX
Growth & Other Asset Area (Weighting Range 10% to 20% with target being 15%) Global Sleeve: AJVAX, ANWPX & THOAX Large/Mid Cap Sleeve: AGTHX, JDCAX & SPECX Small/Mid Cap Sleeve: ABSAX, PCVAX & PMDAX Specialty & Theme Sleeve: LPEFX, PGUAX, NEWFX & THDAX Spiff Sleeve: No positions at this time.
17 total. 6 active stock funds, 4 passive stock funds, 2 active bond funds, 1 passive bond fund, 3 alts (real estate, gold, market neutral), cash. Works for me. Overall allocation is currently 5% cash, 20% bonds, 20% alts, 40% domestic stocks, 20% international stocks. Am increasing fixed-income/cash a bit as I get closer to retirement.
From my own experience, owning a lot of funds was confusing as well as detracting from total portfolio return. A few years ago I had about 28 funds and I was always undecided if I needed this fund or if I should get rid of an under performing fund or wondering if I should buy a fund that's having a good year to replace the under performer. It also didn't make sense to me to have just a few bucks in a fund just to have it.
Maybe others can handle it better than I or are just more comfortable owning many funds, but I feel more in control after cutting back. I can actually give a reason why I own each fund now.
I try to keep it under 20 (including ultra short and money market). Feel better spreading out among several different fund houses (currently 5), believing that each brings its own unique research, analysis and approach to investing. Makes keeping number of funds low difficult. Such diversification isn't for everyone. And I have absolutely no proof that it either soothes volatility or helps returns.
PS: I'm also the type who wears a seat belt all the time on planes, even when they turn off the wear belt sign. I double-check that the coffee's unplugged when leaving home and check my car's tire pressure weekly. -
Edit: Mine are all active. Just noticed other part of JoJo's question. (PRPFX, however, is best described as semi-active)
Thanks for all the responses! Quite the variety in fund diversification I see. It seems that it really is more about comfort level and whatever helps you sleep at night.
For me, I like to keep things pretty simple: 1) Use active managers in areas where I believe they can generate excess returns that more than make up for the costs. Areas like EM (SFGIX and GPEOX) and International Small Cap (TCMPX). I also have an allocation to Alts (OTCRX). 2) Use passive ETFs, in efficient markets, to round out overall portfolio allocations to my liking (tactical tilts on occasion).
@MFO Members: The Linkster believes in KISS ! Regards, Ted 1. SPY 2. QQQ 3. PRHSX 4. PFF 5. CSCIX
@Ted CSCIX is effectively a combination of SCHH and VNQ: over the 3 years through July 2016, these two accounted for ~90% of an ETF replicating portfolio, and over five years ~91%. I get KISS, but why invest in a fund that does not differentiate itself that much from REIT indices?
11 funds right now in my self managed hold portfolio. PRWCX 20% PTIAX 15 DSENX 15 ICMBX 10 FMIJX 8 SFGIX 7 GPGOX 6 SGENX 6 VMRXX 5 ACITX 5 GTLOX 3 [...]
@MikeM I do not know for how long you owned this portfolio, so I analyzed it from December 2013 (largely determined by DSENX inception) through July 2016, assuming reinvestment of all distributions into the same fund, semi-annual rebalancing, and substitution of VMRXX with BIL. The annualized return was 7.17%, standard deviation 6.62%, alpha 0.18%, beta 0.56, Sharpe ratio 1.07, Sortino ratio 1.98, and max. drawdown 6.44%. For reference, over the same period a single 100% position in VBIAX produced 7.16%, 6.77%, 0.16%, 0.58, 1.04, 1.95, 5.20%, respectively. So, effectively your 11-fund portfolio performed on par with a simple balanced fund. Some food for thought for you as well as others on this thread who have even more complicated fund portfolios, or multiple such portfolios in different accounts.
All very interesting. I don't think there's any magic number. Everyone who chimed in is "right" in a sense. Rather than looking at "beating" some index or hypothetical 60/40 balanced fund (and over some short time frame) consider the unique perspective each investor brings to the table.
If you've been with a particular fund house for 20, 30 or 40 years, is it worth dumping them to consolidate holdings elsewhere? You know their practices, policies, culture - and you can probably damn near recite the prospectus for half-dozen or more of their funds from memory. There's a certain value to that knowledge that a 3 or 4 year performance record doesn't measure. And, do you really want to dump those Class A shares you aquired by way of employment or for which you paid a load 30 years ago?
My un-godly mix of 15 funds pretty much tracks my chosen benchmark, TRRIX - a 40/60 balanced fund I believe suitable for someone 20+ years into retirement. Last year I lagged it by 2 points. This year I've been running 3-4 points ahead due to my preference for dollar hedges like foreign curriencies and real asset investments, including real estate, metals and natural resources. And my normal tilt in that direction has more to do with having lived through the ravages of double-digit inflation during the 70s than with any pie in the sky notion that I can regularly outperform the fund in the current environment.
Enough.
Add/Edit: Modern trackers make tracking 15 funds very easy. I suspect those with 30-40 funds have devised methods that require little time and effort. Now - if you were trying to do all this on paper (as 50 years earlier) than I'd see the point of KISS. Not the case today. Heck ... in a few years Apple's Siri or Amazon's Alexis will be happy to do all of this for you while you binge watch NETFLIX or half-nap.
markot06 , Can't disagree on your assessment that most diversified portfolios don't beat the basic 60:40 balanced index fund, but I think there is something to having better diversification than VBIAX. This portfolio has been a work in progress the last couple years from when I rolled my 401k to a Schwab IRA. DSENX was the last added earlier this year.
Can't say what the best number of funds is. I know it isn't 1 domestic balanced fund and 1 bond ETF, at least not for me. And on the other side of the coin, it isn't a boat load of funds where I lose tract of why I own them or how they all fit together. This is a comfortable, easy to understand what each fund does portfolio, easy to manage and monitor.
@Mindy: You can be glad the Linkster is in a good mood, I'm giving you a pass on this one. "Is that true of the number of posts one puts up as well? " Don't let it happen again ! Regards, Ted
21, split across three accounts. Some I've had for over a decade, but the majority are just a few years. Pretty soon I'll decide they've had long enough to prove themselves and I'll whittle some off.
These are almost all active, and account for about 1/2 of my investing. I have a few ETFs that are passive index funds and hold the rest of my assets (VTI, BND, etc.) I'm gradually reducing my active holdings and moving more assets towards passive.
I think if I keep the right three or four active funds I'll have all the diversification I want. GPGOX is a pretty big holding for me, for example, that doesn't overlap much with my other holdings.
There are many apps available for iPhone/smartphones now that anyone can monitor their funds easily. I can check portfolio performance and allocation with a tap. The tools available to us now are incredible compared to when I first started in the eighties. Those days it was phone calls and written checks with days and weeks to accomplish a move. Now it's instant.
The tools available to us now are incredible compared to when I first started in the eighties. Those days it was phone calls and written checks with days and weeks to accomplish a move. Now it's instant.
Certainly one can do more nowadays than in days of yore, but one could still trade online in the 1980s. For the low, low price of $199 (plus tax and shipping), Schwab would send you floppy disks for its online trading application, The Equalizer.
If you have a iPhone, there is a plethora of apps in the App Store. Right now I am using Stockhawk which is a quick NAV check app. It also gives you total assets and the gain or loss for the day. The other one is Visibility. It keeps track of transactions, asset allocation etc.
I prefer simpler apps but there are many that go into a lot of detail. It's pretty much a personal preference.
The tools available to us now are incredible compared to when I first started in the eighties. Those days it was phone calls and written checks with days and weeks to accomplish a move. Now it's instant.
Thanks for the memories. Without a cell phone it was necessary to find a private line at work, normally a corded phone, and typically during lunch, to call in exchanges during business hours. If better (and reliable) ways existed, they weren't widely known or available to the masses in the 70s and most of the 80s. I'm referring to making direct contact with various fund houses (not large brokerages).
Had a Vic20 at home in the 80s. No internet access. At work, IBM-cloned desktop computers with Microsoft were introduced during the 90s and became popular for work related applications by mid-decade. But connectivity to the Internet was later in coming - and attempting to conduct one's personal financial business (fund trading) on them would not have been viewed favorably by my employer.
My first fund foray was from a Money magazine with an ad that you filled out your address etc, cut out and mailed in.
Suspect it meant a bit more to someone to have to write out a check and mail to some out of state address. Yup - did the mail-in routine too. Would phone a week later to make sure they received the check and find out how many shares were purchased. --- Unrelated - Just wondering when small compact cell phones became common/affordable? I remember one gal at work who was an early adapter. Her life was - well - a bit on the "wild" side and being always connected meant a lot to her. Would have it on her desk during staff meetings and would irritate the *#+# out of our boss when it would ring unexpectedly.
That was in the early 90s - Detroit metro area probably among first with good cell service.
Im probably in the camp of having more funds than most people think are needed, but I have a regular ira, roth ira and taxable portfolio. I have 21 managed funds, 2 vanilla index funds, 4 bond funds 8 sector etfs. Largest fund holdings are VDIGX, VIG, PJP, VNQ, SMGIX and PRGTX.
5 Total ETF/Funds (All Vanguard): VTI - Total US Stock Index VXUS - Total International Stock Index VBTLX - Total Bond Market VBIRX - Short Term Bond VFIDX - Intermediate Investment Grade Bond
Comments
"...What do you feel gives you the diversification you need (without dilution) with the ability to easily monitor them all?"
Easily monitored, because they are lumped--- most of them--- in just a couple of fund families. I manufacture a composite of them all, and just look-in, each day. Buying or selling is rare. I tend to exchange from A to B in January, after year-end dividends are already paid.
Below explains how I have my family's investments organized along with how I monitor and manage the portfolio.
Sleeve Management System
Now being in retirement here is a brief description of my sleeve system which I organized to help better manage the investments held within mine & my wife’s combined portfolio. Currently, the portfolio is comprised of two taxable accounts, two self directed ira accounts, a health savings account plus two bank accounts. With this I came up with four investment areas. They are a cash area which consist of two sleeves … an investment cash sleeve and a demand cash sleeve. The next area is the income area which consists of two sleeves. … a fixed income sleeve and a hybrid income sleeve. Then there is the growth & income area which has more risk associated with it than the income area and it consist of four sleeves … a global equity sleeve, a global hybrid sleeve, a domestic equity sleeve and a domestic hybrid sleeve. An finally there is the growth area, where the most risk in the portfolio is found and it consist of five sleeves … a global sleeve, a large/mid cap sleeve, a small/mid cap sleeve, a specialty/theme sleeve plus a special investment (spiff) sleeve. Each sleeve (in most cases) consists of three to six funds (some with seven) with the size and the weight of each sleeve can easily be adjusted, from time-to-time, by adjusting the number of funds and amounts held. By using the sleeve system one can get a better picture of their overall investment picture and weightings by sleeve and area. In addition, I have found it beneficial to xray each fund, each sleeve, each investment area, and the portfolio as a whole quarterly. Again, weightings can be adjusted form time-to-time as to how I might be reading the markets and wish to weight accordingly using some adaptive allocation strategies. All funds pay their distributions to the cash area of the portfolio with the exception being those in my health savings accounts where reinvestment occurs. With the other accounts paying to the cash area builds the cash area of the portfolio to meet the portfolio’s monthly cash disbursement amount with the residual being left for new investment opportunity. In addition, most buy/sell trades settle from or to the cash area with some nav exchanges between funds taking place.
Last revised: 09/12/2016 Master Portfolio
Here is how I have my asset allocation broken out in percent ranges, by area. My target allocations are cash 20%, income 30%, growth & income 35%, growth & other assets 15%. I do an Instant Xray analysis on the portfolio quarterly (sometimes monthly) and make asset weighting adjustments as I feel warranted based upon my assessment of the market, my risk tolerance, cash needs, etc. Currently, I am about 25% in the cash area, 25% in the income area, 30% domestic stocks, 15% foreign stocks & 5% in other assets as reflected in a recent Xray analysis. In addition, I have the portfolio set up in Morningstar’s Portfolio Manager by sleeve and as a whole for easy monitoring plus I use the brokerage account statements and reports as well.
Cash Area (Weighting Range 15% to 25% with target being 20%)
Demand Cash Sleeve… (Cash Distribution Accrual & Future Investment Accrual)
Investment Cash Sleeve … (Savings & Time Deposits)
Income Area (Weighting Range 25% to 35% with target being 30%)
Fixed Income Sleeve: FMTNX, GIFAX, LALDX, LBNDX, NEFZX, THIFX & TSIAX
Hybrid Income Sleeve: CAPAX, CTFAX, DIFAX, FKINX, ISFAX, JNBAX & PGBAX
Growth & Income Area (Weighting Range 30% to 40% with target being 35%)
Global Equity Sleeve: CWGIX, DEQAX & EADIX
Global Hybrid Sleeve: BAICX, CAIBX & TIBAX
Domestic Equity Sleeve: ANCFX, FDSAX, INUTX, NBHAX, SPQAX & SVAAX
Domestic Hybrid Sleeve: ABALX, AMECX, DDIAX, FBLAX, FRINX, HWIAX & LABFX
Growth & Other Asset Area (Weighting Range 10% to 20% with target being 15%)
Global Sleeve: AJVAX, ANWPX & THOAX
Large/Mid Cap Sleeve: AGTHX, JDCAX & SPECX
Small/Mid Cap Sleeve: ABSAX, PCVAX & PMDAX
Specialty & Theme Sleeve: LPEFX, PGUAX, NEWFX & THDAX
Spiff Sleeve: No positions at this time.
Total Number of Mutual Fund Positions = 46
Regards,
Ted
1. SPY
2. QQQ
3. PRHSX
4. PFF
5. CSCIX
PRWCX 20%
PTIAX 15
DSENX 15
ICMBX 10
FMIJX 8
SFGIX 7
GPGOX 6
SGENX 6
VMRXX 5
ACITX 5
GTLOX 3
From my own experience, owning a lot of funds was confusing as well as detracting from total portfolio return. A few years ago I had about 28 funds and I was always undecided if I needed this fund or if I should get rid of an under performing fund or wondering if I should buy a fund that's having a good year to replace the under performer. It also didn't make sense to me to have just a few bucks in a fund just to have it.
Maybe others can handle it better than I or are just more comfortable owning many funds, but I feel more in control after cutting back. I can actually give a reason why I own each fund now.
PS: I'm also the type who wears a seat belt all the time on planes, even when they turn off the wear belt sign. I double-check that the coffee's unplugged when leaving home and check my car's tire pressure weekly.
-
Edit: Mine are all active. Just noticed other part of JoJo's question. (PRPFX, however, is best described as semi-active)
For me, I like to keep things pretty simple:
1) Use active managers in areas where I believe they can generate excess returns that more than make up for the costs. Areas like EM (SFGIX and GPEOX) and International Small Cap (TCMPX). I also have an allocation to Alts (OTCRX).
2) Use passive ETFs, in efficient markets, to round out overall portfolio allocations to my liking (tactical tilts on occasion).
Some food for thought for you as well as others on this thread who have even more complicated fund portfolios, or multiple such portfolios in different accounts.
DSEEX / DSENX, PRBLX, FLPSX, DVY, FREAX / FRIFX / VNQI, SGOIX / FOSFX, PONDX / PDI .
plus several once glorious now ratty stocks.
If you've been with a particular fund house for 20, 30 or 40 years, is it worth dumping them to consolidate holdings elsewhere? You know their practices, policies, culture - and you can probably damn near recite the prospectus for half-dozen or more of their funds from memory. There's a certain value to that knowledge that a 3 or 4 year performance record doesn't measure. And, do you really want to dump those Class A shares you aquired by way of employment or for which you paid a load 30 years ago?
My un-godly mix of 15 funds pretty much tracks my chosen benchmark, TRRIX - a 40/60 balanced fund I believe suitable for someone 20+ years into retirement. Last year I lagged it by 2 points. This year I've been running 3-4 points ahead due to my preference for dollar hedges like foreign curriencies and real asset investments, including real estate, metals and natural resources. And my normal tilt in that direction has more to do with having lived through the ravages of double-digit inflation during the 70s than with any pie in the sky notion that I can regularly outperform the fund in the current environment.
Enough.
Add/Edit: Modern trackers make tracking 15 funds very easy. I suspect those with 30-40 funds have devised methods that require little time and effort. Now - if you were trying to do all this on paper (as 50 years earlier) than I'd see the point of KISS. Not the case today. Heck ... in a few years Apple's Siri or Amazon's Alexis will be happy to do all of this for you while you binge watch NETFLIX or half-nap.
Can't say what the best number of funds is. I know it isn't 1 domestic balanced fund and 1 bond ETF, at least not for me. And on the other side of the coin, it isn't a boat load of funds where I lose tract of why I own them or how they all fit together. This is a comfortable, easy to understand what each fund does portfolio, easy to manage and monitor.
Regards,
Ted
Regards,
Ted
These are almost all active, and account for about 1/2 of my investing. I have a few ETFs that are passive index funds and hold the rest of my assets (VTI, BND, etc.) I'm gradually reducing my active holdings and moving more assets towards passive.
I think if I keep the right three or four active funds I'll have all the diversification I want. GPGOX is a pretty big holding for me, for example, that doesn't overlap much with my other holdings.
This online trading software came out in 1984.
https://www.wired.com/1999/11/schwab-2/
This software ran on "IBM PC/XT, Apple IIe/c, or 100% compatible computers with 128K internal memory".
That's from a 1985 ad that I found in Google Books. You can find it here:
https://www.google.com/search?q=Schwab+Equalizer+"enter+trades+directly"&ie=utf-8&oe=utf-8
Acoustic couplers, 300 baud modems. There was nothing that couldn't be done with two tin cans and a string
I prefer simpler apps but there are many that go into a lot of detail. It's pretty much a personal preference.
Had a Vic20 at home in the 80s. No internet access. At work, IBM-cloned desktop computers with Microsoft were introduced during the 90s and became popular for work related applications by mid-decade. But connectivity to the Internet was later in coming - and attempting to conduct one's personal financial business (fund trading) on them would not have been viewed favorably by my employer.
---
Unrelated - Just wondering when small compact cell phones became common/affordable? I remember one gal at work who was an early adapter. Her life was - well - a bit on the "wild" side and being always connected meant a lot to her. Would have it on her desk during staff meetings and would irritate the *#+# out of our boss when it would ring unexpectedly.
That was in the early 90s - Detroit metro area probably among first with good cell service.
Originally posted under another thread in error.
VTI - Total US Stock Index
VXUS - Total International Stock Index
VBTLX - Total Bond Market
VBIRX - Short Term Bond
VFIDX - Intermediate Investment Grade Bond