In my conversations with you, we talk about some of the mutual funds you own that you oversee. One common refrain when we dig into the top holdings is the amount of overlap you have across your portfolio. Even with the different names and symbols, too many funds out there mimic each other. When times are good, it is no big deal.
What you see in mutual funds is job protection. Because fund managers are under immense pressure to keep up with their benchmarks. When a fund manager misses the benchmark, upper management pays attention. There is nothing that grabs more attention than money going out the door, which often means the fund manager is replaced.
“We need to figure this out,” upper management says as they look for ways to stop the bleeding.
Rather than have your eggs in one basket or with overlap, you might want to work with someone you trust who will not chase the market. Someone who sticks with a plan—your plan. It is a long race. Slow and steady, the magic of compounding can work miracles if you allow it to.
Action Line: Have you looked at your top ten holdings lately? Is there too much overlap? Ready for a review? When you’re ready to talk, I’m here.
