Optimal number of investments?

rathernot

Interested in peoples views on the optimal number of investments to diversify enough whilst not bringing the headache of what to allocate to each please?

For example I believe MorningStar advocate 7 but of course that's not the same as saying an equal 7 day split.

Also I assume it doesn't take into account that a single gold fund will only ever be in gold whilst a single equities fund may itself be split across a wide number of sectors and/or businesses.

Prism

Assuming you mean funds

A start could be 1-2 global funds, a global small companies fund, an EM fund and a strategic bonds fund.

My wife's fund choice is limited so its 1 US, 1 UK, 1 Eur, 1 Japan and 1 Asian fund.

System

It depends upon the size of the portfolio. Foreign and Colonial Investment Trust hold shares in more than 450 companies, but this would not be cost efficient for most private investors.

grey_gym_sock

there are cost efficiency issues - i.e. a lot of holdings won't work well with a small total portfolio.

but it's also about how much attention you want to pay to your investments. if you literally won't look at them for a decade, then 1 multi-asset fund would be ideal. if you're happy to make the odd tweak every year or so, perhaps 3 or 4 holdings would do. if you can't resist doing something every week, then perhaps you should have dozens of holdings, so you can do something to 1 of them each week while leaving most of the portfolio untouched.

Linton

As many funds as you need to implement your strategy and meet your objectives efficiently but no more. This depends on the size of your portfolio, say 1 or 2 for £25K to 10-15 for £250K+

If you are investing in individual shares I would say 20-40 depending on the size of your portfolio.

ColdIron

A small or medium growth portfolio could manage with one and add a few as it gets larger. An income portfolio is going to need several

rathernot

Thanks all, to answer a few comments the intention is long term growth and the current value is around £55k with £1k/month or so going in as well as the annual ISA allowance.

I'm very much drawn to the Fundsmith/Train type funds of which there aren't so many, hence wondering whether to simply stick to my convictions and focus on the ones that there are, and rely on the quality of the stocks v diversify too much and just recreate an expensive LifeStrategy.

Prism

rathernot wrote: »

I'm very much drawn to the Fundsmith/Train type funds of which there aren't so many, hence wondering whether to simply stick to my convictions and focus on the ones that there are, and rely on the quality of the stocks v diversify too much and just recreate an expensive LifeStrategy.

They are both very well diversified if you consider the global nature of the companies in either fund. All you need to decide is if you want to fill any gaps around the edges. For example neither fund has a focus on smaller companies, Fundsmith doesn't do Japan and there are no bonds (should you want any)

rathernot

Prism wrote: »

They are both very well diversified if you consider the global nature of the companies in either fund. All you need to decide is if you want to fill any gaps around the edges. For example neither fund has a focus on smaller companies, Fundsmith doesn't do Japan and there are no bonds (should you want any)

LT has around 25% in Japan which helps.

Without a crystal ball I think I'd sooner just keep money in NS&i at 2% than chance bonds.

enthusiasticsaver

Why not go for a multi asset fund which is already balanced and well diversified? I find that the easiest option.

dunstonh

You should use the number of funds that meets your strategy. That could be anything from 1 to 20. The larger the amount, the larger the number of funds typically as you can include specific sectors rather than general ones.