TITLE

Multi-Fund Diversification Issues

AUTHOR(S)
Connelly, Thomas J.
PUB. DATE
August 1997
SOURCE
Journal of Financial Planning;Aug1997, Vol. 10 Issue 4, p34
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This article focuses on the multi-fund diversification issues in portfolio management. The two most frequent concerns when planners get together to chat seem to be portfolio construction and mutual fund selection. The proliferation of funds and asset classes is making these tasks increasingly more complex and time consuming. More and more attention is being paid to interactions between funds and diversification issues, which is appropriate, since asset allocation via modern portfolio theory is currently the modus operandi in the business. Research suggests that between 10 and 40 properly chosen stocks are sufficient to diversify away the bulk of nonsystematic risk. Many investors use that many equity funds in their portfolios. The performance history of publicly offered funds of funds appears to be uninspiring. Cost could be looked at as the marginal reduction of return as new funds are added, or by comparison to passive or indexing strategies. The relative costs of diversification using mutual funds are largely additional operational costs, part of the costs of active management. Using nondiversified funds, which require managers to focus on their best 10 to 30 stock picks within their style mandate, could focus the competitive advantages of each stock picker, while reducing duplications and portfolio deadweight.
ACCESSION #
9708310913

 

Related Articles

  • Diversification Made Simple.  // On Wall Street;Sep2004, Vol. 14 Issue 9, p111 

    Provides information on two types of asset allocation fund that can be used by financial advisors to diversify their clients' portfolios in a single investment. Balanced funds; Fund of funds.

  • The Rush To Diversify. MARKMAN, ROBERT // Financial Planning;Mar1999, Vol. 29 Issue 3, p232 

    Comments on the conventional methods of diversification. Best approach to portfolio management; Discussion on asset allocation.

  • FOLLOW THE WINNER: PERIODIC INVESTING STRATEGIES. Zwirlein, Thomas J.; Reddy, Venkateshwar K.; Doyle, Barry // Journal of Financial Planning;Oct95, Vol. 8 Issue 4, p160 

    This paper addresses the question of whether the periodic method of allocating money in a portfolio across various funds has any effect on wealth accumulation. A popular, passive method of periodic investment buys shares of a mutual fund at regular intervals. We devise several alternative...

  • How to Master Your Mix. Rekenthaler, John // Money;May2002, Vol. 31 Issue 5, p36A 

    Discusses asset allocation. Thoughts on the scientific process of investing; Advice concerning asset allocation, including keeping it simple; Recommendation for basic diversification; Suggestion that mutual funds, rather than stocks, be used to rebalance a portfolio.

  • Premier's Evan-Cook: Navigating the asset allocation minefield. Evan-Cook, Simon // Fundweb;10/22/2013, p9 

    In this article the author comments on understanding the approach of a multi-manager to asset allocation to know the fund. He states that the fund which is totally flexible will perform well in all market situations. He mentions that knowing why asset allocation is important will help to decide...

  • Tactical asset allocation divides the ranks of fund managers. Thornley, Benjamin; Laurence, Michael // BRW;03/15/99, Vol. 21 Issue 9, p112 

    Presents information on the use of tactical asset allocation (TAA) among Australian fund managers as of March 1999. Comments from Reub Hayes of Ausbil Partners; How the investment technique is valuable in reducing risk in a portfolio; Controversy over whether or not it really works; Description...

  • Portfolio mix: Time to take the bull run by the horns. Kinney, Derrick // Fort Worth Business Press;1/9/2004, Vol. 17 Issue 2, p35 

    Suggests ways of improving stock exchanges. Review goals and asset allocation to re-balance portfolio; Avoidance of rebalancing portfolio based on day-to-day market movements; Mutual funds as a way to diversify investments.

  • Worth a small gamble. Harris, Shaun // Finance Week;7/26/2004, p37 

    Focuses on the performance of specialty unit trust funds in South Africa. Move of investors into asset allocation funds as reflected in the 2004 Association of Collective Investments' quarterly statistics; Top performing funds; Suggestion that investors should put their money into asset...

  • Return to spender. Popplewell, Keith // Money Marketing;12/18/2003, p26 

    Discusses asset allocation in Great Britain. Projected returns from each of the major classes and sectors; Naming of major asset classes as cash, fixed interest, index-linked gilts, commercial investment property funds and equities; Most convenient and reliable source of information on rates of...

Share

Read the Article

Courtesy of VIRGINIA BEACH PUBLIC LIBRARY AND SYSTEM

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics