Mutual Funds Often Fall Short in Diversification

Many of today’s top mutual fund families are not as diversified as you may think. Many of your fund families concentrate their holdings in a limited number of stocks. Last year, Barron’s found that one quarter of Fidelity Management’s nearly $250 billion of assets were concentrated in their 30 favorite holdings. Which means that you may own many of the same holdings even though you have invested in 3 or 4 different funds. In a bear market this could present a problem as the fund family is forced to unload stocks as investors get cold feet. Our recommendation is an approach that includes the entire fund universe so that you are able to truly get diverse investment philosophies working for you.