Chasing Diversity

bilvihur

Looking for a well balanced portfolio, I've always tried to pick good funds in the Large, Mid, and Small Cap categories based on the fund's objective. Lately, this has become difficult to accomplish. In the latest WSJ Quarterly Mutual Fund Report, Lipper now rates the Janus Triton Fund (JANIX) as a Mid-Cap Growth, where formerly it was Small-Cap. It also rates the Janus Enterprise (JAENX) as an All-Cap Growth, where formerly it was Mid-Cap.
I'm not going to rebalance my portfolio because fund managers can't adhere to objectives, or Lipper uses their own criteria, but I'm wondering if my approach to diversity is too simplistic? Rather than Large-Mid-Small, should I be using other categories? I'm interested in your opinions. Thanks.

Ted

Dear bilvihur: Might I suggest you buy index funds. Spy is the S&P 500 that contains both growth and value stocks. You can do the same for the S&P 400 & 600, which gives you 1500 stocks, or buy the Russell 2000.
Regards,
Ted

TSP_Transfer

May I add ITOT.92% of total US Market.
https://www.google.com/finance?q=NYSEARCA:ITOT&ei=oF_pUfCbMMSerAHZzAE

Rbrt

I would use an x-ray tool to look at your entire portfolio and then determine if that is the mix you want. While they are not always current, it is a truer picture of the stock style you own. For example, your Triton fund is 61% mid cap, 39% small cap. Or on a value / growth continum is 10/17/73 (or really growth oriented). This will also show you that some all-american funds actually hold a good bit of foreign.

Of course this puts you in the position of trying to out guess your fund managers but that's for another discussion.

Investor

Just a comment on Janus Triton: Are you aware that the managers that made the track record for that fund has recently left. So, I would consider a change there.

kevindow

Reply to @TSP_Transfer:

ITOT is a great idea, although I would prefer VTI which is slightly less expensive and has a much higher average daily trading volume. The mutual fund equivalent of VTI is VTSMX/VTSAX/VITSX.

Kevin

bilvihur

Rbrt: I'm not familiar with "X-ray tools". Can you suggest one that allows me to just plug in my mutual fund symbols, without giving away my entire financial situation?
Investor: No, I wasn't aware of the change of managers. Are you suggesting dumping the fund, or just paying careful attention thru the next few quarters?

STB65

google "mutual fund x-ray tools". Took me to an apparently free site from Morningstar. (only useful statement here; remainder is opinion)

Ted is correct if you are trying for a balanced US portfolio, but Kdow has the costs figured. I have ridden "good" funds up and down and sometimes up again long enough to believe that the only managers who (occasionally) earn their fees have the latitude to switch styles and markets at will.

Almost all posters here are market timers, but some are still in the closet. Considering how few managers consistently out-perform the index over time (few of mine have; and, as investor points out, they often leave to make more money - and the source of that money is you, of course), you either have to trust "go anywhere" managers (probably best reserved for "non-core" funds) or look at the P/E ratios of various market segments (including non-US) and decide if you have the courage to 'buy the unloved" in an index (probably not emerging markets or foreign small caps, though), which usually works if you live long enough.