Too Many Choices?

There have been a number of recent Wall Street Journal articles which highlight how the ever increasing number of choices in just about everything we do in life has made us less and less capable of, and willing to, actually make a decision.  One of the recent articles entitled “America Shows You Can Have Way too Much of a Good Thing” poked fun at the choices we have in life – in everything from the types of yogurt on the shelf to the number of Netflix movies. 

We especially enjoyed the reference to the number of mutual funds (pegged at 9356 in this article) and the author’s poke at how many are really needed. 

But that got us thinking….  How many are really needed and then how can we make this simper every day for all of us?

Of course there is no agreement in the investment advisory community about how many mutual funds are needed in an individual portfolio.  The number needed depends on the investment objectives – which are different for each client and each portfolio.  Of course all portfolios also need to be sufficiently diversified to minimize the risk that assets will have to be sold when the market is low in order to access cash. 

Our goal is to achieve your investment objectives with fewest number of funds possible.  We are always challenging ourselves to consolidate and simplify.  For example, there is no reason to have multiple funds with the same large cap holdings.  If the holdings are the same, let’s just use the one with lower expenses.  

This article made me count how many mutual funds we actually have clients in.  The answer is fewer than 100 – or about 1% of that 9356 total count. 

But our 100 count and the 9356 count don’t include ETF’s, individual stocks/bonds, any securities on foreign exchanges, money markets etc etc.

Exhausted yet?

Lori