How much to hold in any one fund

ColdIron

BananaRepublic wrote: »

That's nothing to do with diversification, it's just a very bad fund

I was countering the assertion that 'It doesn’t matter which funds or geographical areas are chosen' when plainly it does

DiggerUK

In a boom, diversity does little to enhance ones fortune, and in a bust little to nothing in protecting it..._

BananaRepublic

bostonerimus wrote: »

It depends on the diversification of the fund and your asset allocation philosophy. I invest in broad indexes and have 50% of my assets in a single US equity Index fund and then 25% in an global equity fund ex US and another 25% in a US bond index fund.

I would argue that you are too heavily invested in one market - the US - however, it's not for me to tell you how to invest, and you've probably done quite well, assuming you've been in the market for some years. I prefer a more diverse spread.

BananaRepublic

DiggerUK wrote: »

In a boom, diversity does little to enhance ones fortune, and in a bust little to nothing in protecting it..._

That's bunkum. Had you invested in tech funds before the tech crash, and sold before the tech crash, you'd have made a mint. Had you not sold, you'd have lost a mint. Diversifying over sectors would have reduced your gains pre-crash, and reduced your losses post-crash. That is the whole point of diversification, to reduce risk at the cost of lower potential gains.

DiggerUK

BananaRepublic wrote: »

That's bunkum........

Far from it. If you had gone with the first mantra of the diversistas, all your eggs should not have been in tech stocks. That hit could have been pacified by the boom doing its magic on the rest of the portfolio.
However, in a bust no amount of diversification would have protected..._

BananaRepublic

DiggerUK wrote: »

Far from it. If you had gone with the first mantra of the diversistas, all your eggs should not have been in tech stocks. That hit could have been pacified by the boom doing its magic on the rest of the portfolio.
However, in a bust no amount of diversification would have protected..._

Think it through. Worst case scenario during a boom, you invest in one sector that does not boom. Worst case scenario during a bust, you have invested in a sector that plummets. Diversification is merely the simplest way to reduce risk. The polar opposite is investing in one company's shares.

DiggerUK

BananaRepublic wrote: »

.......Diversification is merely the simplest way to reduce risk.........

But it doesn’t eliminate risk..._

Linton

DiggerUK wrote: »

Far from it. If you had gone with the first mantra of the diversistas, all your eggs should not have been in tech stocks. That hit could have been pacified by the boom doing its magic on the rest of the portfolio.#

Exactly

However, in a bust no amount of diversification would have protected..._

No. In the following bust different sectors fell by different amounts. The tech stocks fell by far more than the rest - quite a few went bust.

enthusiasticsaver

I won't hold any more than £50k in one fund (active not passive index) I have no problem holding more than that in a VLS for example as it is well diversified and a fund of funds.

AlanP_2

enthusiasticsaver wrote: »

I won't hold any more than £50k in one fund (active not passive index) I have no problem holding more than that in a VLS for example as it is well diversified and a fund of funds.

The OP started off asking about percentages, which for this type of thread are more helpful than £values.

£50k to one person might be over 100% of their pot, for others it might be as low as 1% (I wish )

Personally I aim for the broad asset allocation I want, with passive multi-fund core, along with a couple of smaller "side bets" as it were.

Two smallest funds at the moment are about 3% but as they are the two that most of this year's remining investment is going in to (a part of a rebalancing exercie) they will grow to about 7 and 15% respectively by March 2018.

I don't have a problem with <5% allocations to a single fund but wouldn't purposely target anything less than 4%.