How complex is your portfolio?

[audreyh1]

Mine is far more complex than I would like. IMO you can do very well (be adequately diversified) with 3 to 5 funds.

When I first set mine up, I did the careful slice-and-dice - various foreign and US categories, small-cap, mid-cap, large-cap, REIT, different bond funds. I think I went overboard, and a retirement portfolio really doesn't need to be that complex. But in a taxable account, once you've selected and invested in your chosen funds, changing funds around has expensive taxable consequences (assuming you've had gains!).

My portfolio has done pretty well over the years and the diversification has helped the performance, IMO, because it has done well compared to the balanced funds I use as benchmarks. So the complexity is not the end of the world, but it does mean a big spreadsheet and tracking lots of distributions to get everything rebalanced.

Fewer funds is better (provided they are well chosen).

[Meadbh]

I think we need a definition of complexity. Does it mean the type and diversity of assets, or the number of funds and other products, or the number of institutions involved?

On the one hand, I include "alternative" investments such as income real estate, precious metals, venture capital and a target return fund (hybrid), but on the other hand, the only conventional funds on the list are a corporate bond fund and an emerging market index. All other equities are individual. And no, I am not going to list them all. But asset allocation to equities is now only approximately 40% of my portfolio. And what about leverage? I do have a few mortgages on investment real estate. Debt is no more than 5% of assets.

Yeah, I suppose that's complex.

[ShortInSeattle]

You are all awesome, thank you! These posts are like presents under the tree.

We let FIDO actively manage our taxable account this year, and they are doing fine, but I'm ready to take the reins and save the fee. Fortunately they've done a nice job of harvesting capital losses so the rebalancing into my AA shouldn't be too painful, tax wise.

I'll check out the link and the other recommended books. I admit I am leaning towards a portfolio of 5 funds or so, but I find myself wondering if 10 would be more precise... Ad therefore better.... Probably not worth the hassle in the long run.

One more question if you are still feeling generous with the knowledge...

1) Do any of you bother with tax loss harvesting? Selling after a sizeable market loss and rolling into a similar fund? Is it worth it?

[ShortInSeattle]

[edited to remove duplicate text] - Ignore.

[MDJO]

Seven mutual funds, mostly in index funds (Vanguard 500, Schwab 500, Schwab small cap index, short term muni bond fund, etc) I keep a small portion of my overall portfolio, about 10%, to pick individual stocks and/or bonds to try and beat the indices. So far I have only proven to myself that I can't beat them....but it is fun to try, and I haven't lost money (yet). AA is 65% stock, 20% bond, 15% cash (holding more cash than usual, looking for good opportunities)

[MDJO]

[

1) Do any of you bother with tax loss harvesting? Selling after a sizeable market loss and rolling into a similar fund? Is it worth it?[/QUOTE]


Just did some this week. Dumped some of my really bad ideas....

[audreyh1]

Quote:

Originally Posted by ShortInSeattle I'll check out the link and the other recommended books. I admit I am leaning towards a portfolio of 5 funds or so, but I find myself wondering if 10 would be more precise... And therefore better.... Probably not worth the hassle in the long run.

It's just not clear that one gains anything by the "precision" of owning more funds. Probably just more complex calculations with no obvious benefit. If you aim for 5, or even 6 if you have to, much better than 10, IMO.

The folks managing with just 3 funds - usually at least one of them is a balanced fund, and the other two are there to add some missing diversification or to change the AA of the core balanced fund. Just so you realize.

[Midpack]

Quote:

Originally Posted by ShortInSeattle I admit I am leaning towards a portfolio of 5 funds or so, but I find myself wondering if 10 would be more precise... Ad therefore better.... Probably not worth the hassle in the long run.

I could be completely comfortable at 5 funds if not for tax efficiency/placement and tilts. And I will simplify in the years ahead, but like audrey mentioned, I have to move slowly to avoid capital gains.

My 11-12 fund portfolio has tracked pretty close to Wellington over the past ten years, basically the same returns with slightly less volatility (my equity % is lower). If not for tax placement and limiting dividends (capital appreciation is better for us at present), I could have arguably done just as well with 1 fund.

You've probably already seen these but if not, food for thought (note they mostly resemble each other in many ways):

Lazy Portfolios - Bogleheads

Invest Simple with Lazy Portfolios - MarketWatch.com

Why Wall Street Hates the Lazy Portfolios Strategy - SmartMoney.com

[braumeister]

I guess I'm the odd one out here, with about 75 different holdings (4 funds and the rest individual stocks) across 8 different accounts. It's a lot of work keeping up with it all, but I enjoy it so I just consider it one of my hobbies.

[Dawg52]

Quote:

Originally Posted by braumeister I guess I'm the odd one out here, with about 75 different holdings (4 funds and the rest individual stocks) across 8 different accounts. It's a lot of work keeping up with it all, but I enjoy it so I just consider it one of my hobbies.

Mine is nothing that complex, but I too enjoy investing in and following individual stocks. Have a few ETF's and CLF's for target areas and a good chunk of CD's. In time I do plan to simplify, going with 4-5 funds along with CD's.

[LOL!]

I am not into all this simplification stuff because we have multiple accounts and multiple accounts mean multiple funds. That written, there is a simple theme to our asset allocation and most of the accounts have one fund in them and no transactions. The remaining few accounts have a few transactions in them.

If our investments were all held in a single Roth IRA, our asset allocation would have 6 funds in them:
1. Total US Stock Market Index
2. Total International Stock Market Index
3. US Small cap value index
4. International Small cap index
5. REIT index
6. Bond Index

Our portfolio performance is better than the performance of Vanguard Wellington this year, but we have more fixed income (and lower risk) than Wellington.

[growing_older]

Quote:

1) Do any of you bother with tax loss harvesting? Selling after a sizeable market loss and rolling into a similar fund? Is it worth it?

I do sometimes, but for accounts that I am still accumulating I don't have many opportunities to do so. I have considered sometimes that I might be better off to invest in funds with similar objectives, so that if a tax loss opportunity comes up that I can tax loss harvest. With the new accounting rules and identifying specific lots, I think this will be a lot easier in the future.

[Alan]

Quote:

Originally Posted by REWahoo SiS, 90%+ of my portfolio is in three funds: Wellesley, Wellington and a short-term bond fund. Reason: Like me, it's simple.

Similar here, but add in Target date funds in mine and DW's IRA's

[pb4uski]

Quote:

Originally Posted by ShortInSeattle ....1) Do any of you bother with tax loss harvesting? Selling after a sizeable market loss and rolling into a similar fund? Is it worth it?

Absolutely. Yes.

[seraphim]

60 stock 40 bonds

Vanguard total stock
Vanguard total bonds
Vanguard international


DW has a severance package paid monthly and we are restricted in where it can be distributed, so we have a similar set up with Oppenheimer C shares as well. That money gets transferred, though, after a year (the 1%!backload expires) into cheaper Vanguard funds.

[target2019]

Plan    Fund Name    Overall AA
   * * * * * * * * * * * * * * * * * * * * * * * * * * *        
403b    Guaranteed Interest Account    4.51%
403b    EQ/Equity 500 Index    8.33%
403b    EQ/Small Company Index    2.04%
   * * * * * * * * * * * * * * * * * * * * * * * * * * *        4 0 3 B
SEP    Vanguard Total Bond Market Index Fund Inv    12.25%
SEP    Vanguard High-Yield Corporate Fund Inv    2.82%
SEP    Vanguard Total Stock Market Index Fund Inv    5.41%
SEP    Vanguard Total International Stock Index Fund    7.02%
   * * * * * * * * * * * * * * * * * * * * * * * * * * *        S E P
401k    Small/Mid Cap Index Eq Fund    11.17%
401k    MSCI EAFE Indexed Equity    6.56%
401k    MSCI EM Indexed Equit    4.18%
401k    Commodities Fund    0.99%
   * * * * * * * * * * * * * * * * * * * * * * * * * * *        4 0 1 K
S-Pen.    Retirement Plan Survivor's Benefit    15.85%
   * * * * * * * * * * * * * * * * * * * * * * * * * * *        P E N S
Roth-T    Vanguard International Value Fund    3.01%
Roth-S    Vanguard Small-Cap Value Index Fund    2.64%
Roth-S    Wellesley Income Fund Inv(VWINX)    3.24%
Roth-T    Vanguard REIT Index Fund Investor Shares    4.30%
   * * * * * * * * * * * * * * * * * * * * * * * * * * *        R O T H
T-Free    Vanguard NJ Long-Term Tax-Exempt Fund Inv    4.23%
   * * * * * * * * * * * * * * * * * * * * * * * * * * *        T A X A B L E H

We are victims of circumstance - both working.
So 16 funds, with some overlap.

[truenorth418]

25% VTI and US dividend growth stocks
15% small cap fund
15% international fund
30% bond funds and iBonds
10% REITS and REIT fund
5% cash

About half the cash is current year's spending which I refill with dividends and interest as I go along for spending next year and so on.

[Major Tom]

I recently changed my AA. It now represents pretty much what I am going to be sticking with for a while. The following is the total of both taxable and tax-deferred accounts, with the funds allocated to maximize tax-efficiency (bond funds in the tax-deferred accounts).

38% VTSAX (Vanguard Total Stock)
17% VTIAX (Vanguard Total Intl)
37% VBTLX (Vangaurd Total Bond)
3% in individual equities (for fun, and will probably phase out over the long term)
5% in cash

I don't have the interest/ability/level of knowledge to maintain a more complex portfolio, so the above works for me. The proof of the pudding will come in 10-20 years if it is still working well for me

[clifp]

The good news is that I only have 7 ETFs/mutual funds.

The bad news is I have 5 individual bonds, 30+ stocks, 9 Master Limited Partnerships, a handful of options, 4 rental properties, a few Ibonds, and some CDs. Angel investments in: a Japanese tax shelter, health care technology company, an internet ecommerce company, a company that installs PV systems for non profits, and an Angel investment mutual fund.

So I am pretty sure my portfolio isn't simple.

[racy]

Vanguard Total Stock Market Index
Vanguard Total Int'l Stock Index
Vanguard Intermed-term Bond Index
Vanguard REIT Index
Vanguard Wellesley