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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: of 75402  
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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