Poll: Percentage of Smallest Holding in Portfolio?

[ERD50]

Am I missing something? The math in many of the responses here doesn't seem consistent with how we generally think about diversification, does it?

We consider a broad-based index fund (like SPY or VTSMX or BND) to be diversified right? So if our smallest fund is say, 20% of our overall portfolio, then our smallest holding is the smallest holding in that fund, times 0.20 of our holding in the fund. Likely to be minuscule.

But it seems like people are treating an investment in a fund as one big glob. But that's way different from the same % in a single stock.

So I won't calculate my smallest holding, it is tiny.

-ERD50

[dallas27]

5% in vwo, which is emerging equity. Technically I hold to boost my overall emerging exposure to a total of 10% because i have much larger index holdings that are partially emerging(veu,vss).

[Totoro]

My individual stock portfolio (~30% of total NW) goes in 1% increments up to max 4% per stock, with an aim to have around 10 positions.

If I would stop doing individual the smallest position would be 8%, an emerging markets ETF.

[traineeinvestor]

0.025% (one quarter of one tenth of one percent) of total household assets.

I allow myself up to 3-4 small highly speculative investments as a valve against doing stupid things with meaningful amounts of money - at least that's the theory Currently I have only one (an Australian biotech) and, yes, it's gambling.

[mrfeh]

I have a very small percentage (<2%) of our portfolio assigned to "speculation".

If I ignore that, our smallest holding is about 7%.

[phil1ben]

I own no mutual funds. Individual stocks are 20% of my NW. Individual stocks within this group range from just under 1% to 9.9% of the individual stock portfolio.

[kcowan]

Quote:

Originally Posted by ERD50 Am I missing something? The math in many of the responses here doesn't seem consistent with how we generally think about diversification, does it? -

I think the OP was after the smallest % that the investor decides to hold. They have the holding for its performance not its components.

[scrabbler1]

Quote:

Originally Posted by kcowan I think the OP was after the smallest % that the investor decides to hold. They have the holding for its performance not its components.

That was my take, too. I didn't include the small amount in my local bank's checking account because it is a condition to keeping the hub account open and free of any monthly fees. It doesn't generate any investment earnings. Simply avoiding any fees could be considered "earnings" but I don't consider that in the equation.

[splitwdw]

Quote:

Originally Posted by mrfeh I have a very small percentage (<2%) of our portfolio assigned to "speculation". If I ignore that, our smallest holding is about 7%.

I'm still in accumulation stage and was advised to have 1 or 2 small holdings in a speculative stock. That's my play money and won't hurt me if it goes south.

[kaudrey]

I have a few managed funds as well as individual stocks, all bought in the 80s and 90s in my taxable account, that I am holding until I retire to avoid capital gains taxes. Now I am strictly an index fund investor, so these "legacy" holdings have become a very small part of my portfolio over time.

[swakyaby]

My smallest holding is my biggest loser, Vanguard's Precious Metal and Mining Fund, approximately 0.9% of my portfolio. I plan to divest myself of it when I need capital losses to offset capital gains next year.

[Ed B]

3% in megacorp company stock which happens to be my only single stock. My 401k matching funds are in the form of company stock so i will have a percentage in it until retirement.

[ERD50]

Quote:

Originally Posted by kcowan I think the OP was after the smallest % that the investor decides to hold. They have the holding for its performance not its components.

But I guess I don't see the sense in the distinction. I don't buy SPY or BND for being SPY and BND, I buy SPY and BND to get exposure to all their components.

It's not like SPY represents a single holding, it represents all it's holdings. I just don't see how looking at it any other way does anything useful. With that view, I could hold two different S&P500 funds/ETFs and ignore that they really are essentially the same investment? Makes no sense to me.

-ERD50

[Sunset]

Quote:

Originally Posted by Zona I have .37% invested in VOO (most of the rest of our portfolio is in other funds, like SPY or EAFE). The reason I put some in VOO is because a few years ago I received a small inheritance from an aunt. We don't need that money, so I wanted to invest/set it aside for my young/future nieces and nephews. Having it "separate" just helps me with the mental accounting to keep the initial investment earmarked along with any growth. There's probably a better way to do it, but that's what I came up with at the time. I have maybe one other fund like this that is also <1% of the portfolio. I'm open to suggestions if there's a better way to track something like this without doing a bunch of math, lol.

Open an account at a different brokerage, and transfer "IN KIND" the money there. If it's enough, they will even give you a bonus few hundred for the effort.

Then you can diversify it a little more without worrying about mixing it with your other money.

[NW-Bound]

Holding 1% of a diversified MF or ETF may not make sense. Suppose that the rest of your stock is in S&P, and the S&P goes up 5%, and this bitty component beats the S&P by 25% and goes up to 6.25%. Then, your entire stock AA goes up 0.99*5% + 0.01*6.25 = 5.0125%.

That extra 0.0125% means $125 for each $1M in your portfolio. Is it worthwhile? I guess it depends on the investor.

As for me, if I buy this MF because I think it is going to beat the S&P or because I want a bit more concentration in a particular sector or if I want to do buy low/sell high with rebalancing, I would not place such a bitty bet.

Of course 1% in individual stocks or specialized ETFs can pack a punch. They can lose 1/2 the value, or double in a year, and that means 0.5% in the value of your portfolio. That is not a small amount when one thinks of living on 3% WR.

[GravitySucks]

Cash at less than 1% sometimes up to 2% is my smallest item.

[jollystomper]

Chemours, well less that 1% - received some shares when DuPont spun them off 2 years ago. Hindsight is 20/20 , the stock is up around 250% since then. One day it will fund nice seats at an NFL game for us.

[RunningBum]

My HSA is less than 1%, in a credit union CD. I've got a couple of other small savings accounts in banks also less than 1%. If you want to combine all cash equivalents as a single investment, or only count non-cash, I've got some between 2-5%. Equity funds only, 5-10%.

[SecondCor521]

2.70% in an age-based option inside an Idaho 529 if you want to include my kids' college accounts. 6.66% in VBTLX if you don't.

[kcowan]

Quote:

Originally Posted by ERD50 But I guess I don't see the sense in the distinction. I don't buy SPY or BND for being SPY and BND, I buy SPY and BND to get exposure to all their components. It's not like SPY represents a single holding, it represents all it's holdings. I just don't see how looking at it any other way does anything useful. With that view, I could hold two different S&P500 funds/ETFs and ignore that they really are essentially the same investment? Makes no sense to me. -ERD50

OK so my smallest individual holding is 0.14% but it is direct as I do not break down my funds that way since I have no control over them. Why would I say it is a holding if it can disappear overnight without any input from me? The idea behind holding 2 different ETFs is diversity. I agree that if they have many of the same holdings, it makes no sense.