Time and diversification are an investor’s most important tools. If you want a truly diversified portfolio, look at the stocks held by a fund. Chances are, most of the stocks will fall into one of these categories:
- Large-company growth stocks
- Large-company value stocks
- Large-company stocks that blend growth and value
- Mid-sized company growth stocks
- Mid-sized company value stocks
- Mid-sized company stocks that blend growth and value
- Small-company growth stocks
- Small-company value stocks
- Small-company stocks that blend growth and value
You should have funds in most, if not all of these categories. If you have two funds in each category, you can get different managers’ strategies for that sector. Add some bond funds and some international funds and you may have a well-diversified portfolio.
