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Author: jpmcdonald Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75625  
Subject: How do I ensure diversity in mutual funds Date: 1/4/2000 7:44 PM
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I would appreciate if someone could suggest a blend of mutual funds. I have been investing in strictly a fund based on the S&P 500. Due to some good fortune I am now able to put substantially more into the market and am worried about not being diversified enough. I am 29 years old and will not touch the money entil I retire (hopefully).

Specifically I would like to know what the proper balance would be considering areas like:

1. Large, Mid, Small and Micro-caps
2. US vs. Foreign investments
3. Higher risk (e.g. tech funds) vs. more moderate risk funds
4. Growth vs. Value
5. Various Indices (e.g. Total Market, SP 500, NASDAQ)

Some funds I am considering (in addition to keeping my S&P 500) include:

Putnam New Opps
Vanguard Growth Index
Vanguard US Growth
EuroPacific Growth
T Rowe Price Science and Technology

I know this is a LONG winded question but I think a lot of fools like me could benefit from a little insight.

Jason
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Author: Crosenfield Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17356 of 75625
Subject: Re: How do I ensure diversity in mutual funds Date: 1/4/2000 9:03 PM
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All of these are quite aggressive funds. The Putnam is a load fund, which would cause many of us to dismiss it out of hand. The others are all good choices for long-term investments.
Chris

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Author: venkdaddy One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17383 of 75625
Subject: Re: How do I ensure diversity in mutual funds Date: 1/5/2000 11:46 AM
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I would appreciate if someone could suggest a blend of mutual funds. I have been investing in strictly a fund based on the S&P 500. Due to some good fortune I am now able to put substantially more into the market and am worried about not being diversified enough. I am 29 years old and will not touch the money entil I retire (hopefully).

A lot of Fools feel that the S&P 500 is as much diversification as you'll ever need. But with your long time horizon, you could certainly afford to take some more risk. Do you only want to use mutual funds, or would you be okay with opening a brokerage account? With the brokerage account, you could buy some QQQ (NASDAQ 100 tracking stock). The brokerage account would also let you get into various other index-trackers such as DIAmonds and SPYders.


Specifically I would like to know what the proper balance would be considering areas like:

1. Large, Mid, Small and Micro-caps
2. US vs. Foreign investments
3. Higher risk (e.g. tech funds) vs. more moderate risk funds
4. Growth vs. Value
5. Various Indices (e.g. Total Market, SP 500, NASDAQ)


Well, I can't give you exact percentages, but I would certainly tilt my portfolio toward the higher-risk, growth areas since you have a long time frame to work with. I would consider 1/3 QQQ, 1/3 S&P 500, 1/3 Small/mid-cap index. If you don't want to set up a brokerage account for QQQ, there are some tech index funds out there, I believe. That will give you exposure to the tech sector. S&P index fund will give you broad diversification and a good balance between growth and value. I don't know enough about international funds to tell you what to do there.

Good luck with it.
-john

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Author: dweiss3 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17391 of 75625
Subject: Re: How do I ensure diversity in mutual funds Date: 1/5/2000 3:09 PM
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I was looking the other day at all 7 of my mutual funds and trying to determine how much tech exposure I had. Using the Morningstar site, I checked the top five holdings of each of my funds. I found that the Vanguard 500 Index and the T. Rowe Price Science and Tech funds both hold Microsoft and Cisco in their top 5. Further, of the top 10 holdings of my 7 funds, there were only 51 unique entries. Of the 51, twenty were what I would call "tech" stocks. Three stocks were held by three of the funds (Microsoft, Intel and Exxonmobil) and seven more stocks were held by two funds (Cisco, IBM, Qualcomm, Lucent, Walmart, Merck, and Sony). This surpised me because my 7 funds include a large cap value fund, a small cap index fund and an international fund.

My recommendation is to look at the specific companies held by funds that you are considering for diversificaiton to ensure that there is not too much overlap.

dave

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Author: mphipps Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17416 of 75625
Subject: Re: How do I ensure diversity in mutual funds Date: 1/5/2000 11:56 PM
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Opinions I got.
IN my option here is the mix
S&P 50%
Tech 20% not more than 40%
International 10-20%
And that is it. But you can do this add these two types
Russell 200O Index
Company stock or Aggressive growth.

I love TRowe PRICE Science and TEchnology.

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