How complex is your portfolio?

[MDJO]

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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]

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]

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]

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]

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]

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]

....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

 

[Spanky]

We have too many funds:

VAIPX VANGUARD INFLATIO
VWIAX VANGUARD WELLESLE
VGSLX VANGUARD REIT IND
VWITX VANGUARD INTERMED
VINEX VANGUARD INTERNAT
VTSAX VANGUARD TOTAL ST
VGSTX VANGUARD STAR FD
VFSTX VANGUARD SHORT TE
VSIAX VANGUARD SMALL-CA
VBMFX VANGUARD BOND IND
VTSMX VANGUARD INDEX TR
VIVAX VANGUARD INDEX TR
VHGEX VANGUARD HORIZON
FLPSX FIDELITY LOW-PRIC
FNMIX FIDELITY NEW MARK
FIMIX FIDELITY MINNESOT
FSICX FIDELITY SCHOOL S
VBTLX VANGUARD TOTAL BO
VFIRX VANGUARD SHORT-TE
VFIFX VANGUARD TARGET R
VTWNX VANGUARD TARGET R

 

[REWahoo]

We have too many funds:

+1

 

[Nords]

I'm wondering if a few of you would be willing to share how finely you decided to slice your pie, and why you made the choice you did.

Before I answer the question, I should point out that our biggest asset class is our military pensions. We can do a lot of experimentation while knowing that we'll always have enough money for groceries & property taxes.

I don't know how to account for our rental property. This year it turned a considerable (taxable) profit, but that could be just deferred maintenance or the gap between hurricanes. I don't think you can "rebalance" rental property unless you have a lot of it, and in our case we're holding it mainly for family convenience instead of investment return. I hope to answer that question for good within the next two decades... hopefully our exit strategy is not "probate".

Having fronted those disclaimers:
Frank Armstrong used to call it "diworsification". It's a necessary part of investing, but it's too easily taken to extremes.

I can handle the tracking on a half-dozen assets. More importantly, I can only ignore the tracking on a half-dozen assets without eventually getting bitten by one of them.

I know that some can keep tabs on a portfolio of 30-40 individual stocks, but I think that you have to be hard-wired to stay up with the tracking. Otherwise I'd get a few weeks behind and suddenly I'd have a part-time job updating my portfolio. I found it was a chore just for a dozen individual stocks, let alone a meaningful number.

I've also spent a considerable amount of time over the last 30 years experimenting with different asset classes. You can buy just about anything and claim that you're experimenting with it, but you don't get a real feel for your emotional tolerance on a class until it's at least 10% of your portfolio. There's nothing quite like the thrill of buying on margin, shorting, or selling naked puts, and I don't mean that in a good way. But I didn't really know whether I'd find it worth my time until I tried it and scaled it up. Those criteria of "How do I want to spend my time?" and "Can I sleep at night?" helped me decide to stay away from commodities, most bonds, peer-to-peer lending, IPOs, and all but one individual stock. So I'd say that any asset in a portfolio should make up at least 10% of that portfolio.

Like Clif, I've made angel investments in startup companies. I've spent five years getting into it, and I'll probably spend 5-10 years getting out of it. The process has been hugely educational and it's made me a better investor. The "problem" is that it has not yet been profitable. (Even rental real estate is more liquid than an angel investment.) More importantly I've learned that I have "enough". If I end up sitting on the next Google or Facebook, I don't think it'll make a difference in our lives. Same with the income from selling call & put options-- it's not profitable enough unless you scale it up, and then it's too much risk for the work.

The biggest advantage of all this experimentation is that I won't be tempted to try any of it when I'm in my 70s or 80s. I'm apparently at the peak of my cognition right now, and it's all downhill from here. 25 years from now when some nice young man (or sweet young girl) cold-calls with a can't-miss idea, I can probably say that I've been there and done that.

In our ER portfolio, our top three are the Dow Dividend ETF (DVY), the International Value ETF (EFV), and Berkshire Hathaway. Small cap is close behind, with shares like the iShares small-cap value ETF (IJS), the TSP "S" fund, and angel investments*. These days we try to limit each to 18-28% of the portfolio before rebalancing.

We usually try to keep our cash fairly low at 4-8% of our portfolio just because it's two years of living expenses. Right now we're sitting on an all-time high of 15%, but I suspect we'll have a few opportunities to put some of that to work in the coming year.


* Yeah, I know angel investments are in a class by themselves. But by lumping them with small cap, I'm forced to sell one to buy the other.

 

[CyclingInvestor]

I know that some can keep tabs on a portfolio of 30-40 individual stocks, but I think that you have to be hard-wired to stay up with the tracking. Otherwise I'd get a few weeks behind and suddenly I'd have a part-time job updating my portfolio. I found it was a chore just for a dozen individual stocks, let alone a meaningful number.
[/SIZE]

I agree completely. My portfolio is all individual stocks, but I get the same relaxed feeling from keeping my tracking numbers up to date that others might get from watching a football game. If I started to feel that this was a chore, I would probably switch to mutual funds.

 

[ikubak]

Mostly 4 index funds:

Vanguard Total Stock Index
Vanguard Total International Index
Vanguard Short Term Bond
Vanguard REIT Index


I use Vanguard S&P 500 if I don't have access to total stock index and I also have some Wellington and Vanguard Balanced Index. I think I have too many funds, but I try to keep my allocation consistent and expenses below .2%. Right now I am about at .17%.

 

[MooreBonds]

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.

(sheepishly slowly raising my hand) I'm in the camp with braumeister.

I just can't wrap my head around just having a handful of funds, and not being diversified enough into the emerging markets that (IMO) will have a good chunk of growth going forward. And how do you pick just one emerging market fund?

When I accumulate a bit of cash to invest, I'll look around for stocks that look cheap. And when the cash accumulates in my tax-deferred accounts, I'll usually try to lean towards fixed income (like preferreds) over common stock.

And finally, I favor diversification. Since my average investment used to be about $2,000-$2,500 (and has since been upped to about $3,500 per position as the portfolio grows), I've amassed an unconscionable portfolio of 437 ETFs, individual (common/preferred) stocks, REITs, MLPs, and mutual funds among just about every class out there. It helps when everything's arranged in a massive spreadsheet to keep track. Most of the count is in individual stocks/preferreds, with just a little overlap with some Vanguard funds and foreign ETFs.

If I had the $ in cash that I have now, there's no way I'd sit down and come up with a list of 437 today - it's more a victim of slowly growing the portfolio over the years and letting the dividends DRIP as I wait patiently for the day when I can yell FIRE and pull the plug, and then adding a few here and there when cash becomes available.

When I do reach retirement, I don't know if I'll simplify things or not. It is nice having an expense ratio that is dwindling down to just a few basis points on all of those equities, however. And I do pity the fool that inherits such a portfolio and liquidates them all in the same year, and spends 2 days filling out Schedule D1s out the wazoo.

 

[smurray5991]

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!).

I will simplify in the years ahead, but like audrey mentioned, I have to move slowly to avoid capital gains.

Thanks to all for sharing your wide diversity of investment profiles.
I feel I have too much complexity as a function of numerous incremental decisions/events over the last 20+ years (Current holdings -- TAXABLE: 5 individual stocks, 2 bond MFs, 16 stock MFs; TAX-DEFERRED: 5 IRA stock MFs, 3 TSP stock funds) = 31 total).
I hope to simplify greatly as imminent ER approaches in 2013, but even more importantly adjust AA/rebalance in the process. However I am also concerned about the tax consequences of "change" as mentioned by others. I definitely have to spend some time doing the math, and will also definitely search the Forum archives to learn from others on the most tax-efficient strategies and experience folks have had in moving towards greater portfoilo simplification when you didn't necessarily start out that way.....!

 

[bondi688]

Complexity of the portfolio lent little to enhanced performance most of the time.

 

[Meadbh]

Complexity of the portfolio lent little to enhanced performance most of the time.

I believe that's been shown by research, though I am too lazy to look it up

If you have hundreds of funds, inevitably there will be duplication of stock holdings. That will increase the correlation between them, which defeats the purpose of diversification.

 

[easysurfer]

I try to keep my portfolio simple.

Pretty much just:

Tot bond, tot US stock, tot Int'l Stock, MM fund.

I have an account of each class in taxable, and a counter part in IRA. When time to re-balance, I try to do so the most I can in IRA to avoid tax consequences.