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Is holding a 2.5% position in such categories as gold, real estate, commodities, etc really diversification or only window dressing? Possibly more confusion/trouble than it's worth?


  • Good question and likely many personal answers. IMO, holding any fund at 2.5 % or less is mathematically window-dressing in regard to having much affect on your portfolio. I just don't have any use for toe-holds or foot-holds. I have a simple brain, so the very small positions are just confusing for me.
  • I think that diversification is a big driver of the "Lazy Portfolios," and the smallest allocation that I've ever seen is 5%.
  • @Bobpa: In order to have any meaningful position in any single mutual fund, I agree with MikeM and Tony it should be at leat 5%. You want to be careful, and understand diversification and diworsification"

  • 5% is okay, but probably won't move the needle much, and anything less is probably not going to do much of anything for you either. Frankly, things that hold single-digit percentages in stuff (ie, some funds-of-funds) I avoid like the plague for several reasons, including what I just said and also b/c it's probably holding it to help prop up the AUM in the various positions it holds. (IE, PAUIX)

    FWIW saying I'm mainly an equity person and don't diversify across "asset classes" to so speak.

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